Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

ABERDEEN HARBOUR ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Aberdeen Harbour, presented by Mr. Maclay; and ordered (under Section 7 of the Act) to be considered Tomorrow and to be printed. [Bill 8.]

CHURCH OF SCOTLAND (GENERAL TRUSTEES) ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to the Church of Scotland (General Trustees), presented by Mr. Maclay; and ordered (under Section 7 of the Act) to be considered Tomorrow and to be printed. [Bill 9.]

DUNDEE CORPORATION (CONSOLIDATED POWERS) ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Dundee Corporation (Consolidated Powers), presented by Mr. Maclay; read the First time, and ordered (under Section 9 of the Act) to be read a Second time upon Wednesday 20th November and to be printed. [Bill 10.]

Oral Answers to Questions — TRADE AND COMMERCE

Turkey (Commercial Debts)

Mr. Gresham Cooke: asked the President of the Board of Trade if he is aware that British manufacturers who supplied goods to Turkey as long ago as 1952 and registered their transactions with the Central Bank in March, 1953, have not yet been paid; and what steps he will take to negotiate a new agreement with the Turkish authorities so as to expedite payments of debts nearly five years old.

The President of the Board of Trade (Sir David Eccles): Yes, Sir. But the Turkish authorities are keeping to the terms agreed with us and, in view of the difficult balance of payments situation in Turkey, this does not seem a good time for fresh negotiations in the sense my hon. Friend suggests.

Mr. Gresham Cooke: Could my right hon. Friend say whether the Turkish Government are using their sterling for buying sterling products instead of repaying their debts, and ought they not really to face up to their responsibilities and the fact that they are nearly five years in arrears?

Sir D. Eccles: We have an agreement with the Turks whereby they pay off £130,000 a month of their old commercial debts, and they are keeping to that agreement.

Draft International Copyright Conventions

Mr. Gresham Cooke: asked the President of the Board of Trade why two separate new draft International Copyright Conventions have been prepared respectively by the United Nations Educational, Scientific and Cultural Organisation as well as by the International Labour Organisation; which body is regarded by Her Majesty's Government as more authoritative in this connection; and what steps he proposes to take to suggest that this duplication of effort should be avoided.

Sir D. Eccles: The two draft conventions are not strictly copyright conventions but deal with rights that may be


given to performing artists, to makers of gramophone records and to broadcasting organisations. These matters involve both copyright law and the earnings of artists and the two draft conventions reflect these two aspects. I dislike unnecessary duplication as much as my hon. Friend, but the organisations to which he refers have each a part to play.

Trade with Albania

Mr. Turner: asked the President of the Board of Trade if he will supply details of imports from Albania and exports from the United Kingdom to Albania during the past three years.

Sir D. Eccles: Trade with Albania is very small. With permission, I will circulate details in the OFFICIAL REPORT.

Following are the details:


£'000



1954
1955
1956


Imports:





Chromium ore
—
—
13·2


Total
—
—
13·2


Exports:





Cotton waste
0·8
—
—


Pneumatic tyres
1·8
—
—


Machinery other than electric
—
—
0·6


Scientific instruments
0·7
0·3
neg.


Other goods
0·1
0·8
1·6


Total
3·4
1·1
2·2


Re-exports
—
—
—

Canned Deciduous Fruit

Mr. Braine: asked the President of the Board of Trade what considerations he is giving to an import licensing programme for canned deciduous fruit from the United States of America in 1958 in view of the reported allocation of funds under that country's Public Law 480 for this purpose; and whether he will restrict the first part of any proposed quota to token proportions so that the size of the new year's Commonwealth packs can be assessed and their disposal be safeguarded.

Sir D. Eccles: We are not at present considering details of United States proposals for canned deciduous fruit under Public Law 480. In accordance with our

normal practice, we should consult Commonwealth Governments before reaching a decision.

Mr. Braine: Whilst that is a very good Answer as far as it goes, may I ask my right hon. Friend whether consultations have yet taken place with Commonwealth Governments in view of the possibility of the United States making these proposals?

Sir D. Eccles: Until we have formal proposals there is nothing to consult about.

Sir P. Agnew: Could my right hon. Friend say whether he will also consult the British canning industry so that the interests of home producers may find their proper place?

Sir D. Eccles: We shall take all those things into consideration.

Restrictive Trade Practices Act

Mr. Dodds: asked the President of the Board of Trade if he will make a statement on the extent to which he has exercised his powers under the Restrictive Trade Practices Act, 1956, with regard to restrictive trading agreements brought to the attention of the Registrar of Restrictive Trading Agreements and the Restrictive Practices Court.

Mr. Wade: asked the President of the Board of Trade (1) what additions he has made since June, 1957, to the list of agreements for early consideration by the Restrictive Practices Court;
(2) what directions have been given to the Registrar of Restrictive Trading Agreements as to the order in which cases shall be taken before the Restrictive Practices Court.

Mr. E. Fletcher: asked the President of the Board of Trade what directions he has given to the Registrar of Restrictive Trade Practices with a view to varying the order in which proceedings are to be taken before the Restrictive Practices Court.

Sir D. Eccles: The Board of Trade has made two orders under Sections 9 and 10 of the Restrictive Trade Practices Act calling up for registration all categories of agreements covered by the Act.
The Board has given two directions to the Registrar under subsection (2) of Section 1 about the first cases to be taken before the Restrictive Practices Court. The text of the first direction was given on 16th April, 1957, in reply to a Question by my hon. Friend the Member for Gravesend (Mr. Kirk), and I am arranging for the text of the second direction to be circulated in the OFFICIAL REPORT.

Mr. Wade: In view of the fact that the first case may not come before the Restrictive Practices Court until the spring of next year, is the President of the Board of Trade satisfied that progress is adequate to deal with the vast number of cases which have been put on the list? Can he give an indication when the further list which has been added is likely to be reached for consideration by the Court?

Sir D. Eccles: The time when cases are reached by the Court is a matter for the Attorney-General, but the first fruits of this legislation are really to be seen in the number of restrictive practices which have been scrapped rather than registered.

Mr. E. Fletcher: Will not the President of the Board of Trade realise that the speed with which these restrictive practices are being dealt with is nothing like that expected by his predecessor, and will he not, therefore, do something to expedite the machinery of the Act so that these matters can be dealt with very much quicker?

Sir D. Eccles: I think the hon. Gentleman will find that the Board of Trade has done what it is its duty to do under the Act. It is now a matter for the Registrar, who is not responsible to the Board of Trade but independent, and for the Court. If the hon. Gentleman wishes to ask a Question about that, it should be addressed to the Attorney-General.

Mr. Jay: Is it not extraordinary that eighteen months after the passing of the Act not a single case has gone before the Court? In view of the assurances we have had from the right hon. Gentleman's predecessor about how quickly this Act would work, cannot the right hon. Gentleman at least tell us when the first case will go before the Court?

Sir D. Eccles: When the first case goes before the Court is not a matter for the Board of Trade but for the Attorney-General.

Following is the text:

RESTRICTIVE TRADE PRACTICES ACT, 1956

Direction with respect to the order of proceedings before the Restrictive Practices Court

Whereas the Board of Trade on the 16th day of April, 1957 gave to the Registrar a Direction (hereinafter referred to as "the Principal Direction") with respect to the order of proceedings before the Restrictive Practices Court in respect of agreements described in the Schedule thereto and therein referred to as "scheduled agreements": Now, therefore, the Board of Trade in pursuance of section 1 of the Restrictive Trade Practices Act, 1956 (4 & 5 Eliz. 2. c. 68) hereby direct that the agreements described in the Schedule hereto shall be added to the Schedule to the Principal Direction which shall have effect as if such agreements were also scheduled agreements.

Dated this 3rd day of September, 1957.

(Signed) E. A. COHEN,

A Secretary to the Board of Trade

SCHEDULE

1. Agreements under which restrictions (being restrictions by virtue of which such agreements are subject to registration under the Registration of Restrictive Trading Agreements Order, 1956) (S.I. 1956/1869) are accepted by any of the parties in relation to the supply by them, in the course of their business, of goods of any of the following descriptions, namely:—

agricultural machinery; agricultural machinery parts; bolts and nuts; bottled beer; cement; copper wire rods, hot rolled; dairy machinery; electric domestic cookers; electrical fractional horse power motors; electrical subsidiary power instruments, the following—

ammeters and voltmeters of the dynamo meter indicating type, deflectional frequency indicators, power factor indicators, rotary synchroscopes and watt-meters;

electrical transformers; electronic valves, including where specified, cathode ray tubes; engineers' small tools; hand tools; industrial furnaces; kapok and kapok mixtures; phenol; photo litho reproductions; plate glass; portable pneumatic power tools; pumps; pumping plant; road rollers; sanitary goods (other than pipes) made of fireclay, earthenware or vitreous china; typewriters; washed sand and gravel produced in Scotland; water tube steam boilers intended to be installed on land; woven woollen blankets (other than blankets for mechanical purposes);

2. Agreements under which restrictions (being restrictions by virtue of which such agreements are subject to registration under the said Order) are accepted by any of the parties in relation to the application by them, in the course of their business, of—

(a) the process of dyeing, bleaching or finishing products of the hosiery industry; or
(b) the process of bending plate glass.

Commodity Prices

Mr. H. Wilson: asked the President of the Board of Trade if he will propose to the United States of America and other countries involved a conference to consider recent movements in the prices of primary commodities with a view to concluding specific commodity agreements to assure greater stabilisation of prices on a basis fair to producers and consumers alike.

Sir D. Eccles: No, Sir. As I said in the debate last Wednesday, we are watching commodity prices closely, but so far the volume of international trade is keeping up well. Discussions are currently taking place in G.A.T.T. on this subject, and I do not consider that a special conference is called for.

Mr. Wilson: But since G.A.T.T. itself provides machinery to deal with problems of the stabilisation of prices, will not the right hon. Gentleman realise the very grave problems for the sterling area, economic and, indeed, political, that may arise from any further recession in commodity prices? Since the United States may now themselves be willing to look at this, especially on cotton, will not the right hon. Gentleman take up the suggestions we made in the economic debate on this matter?

Sir D. Eccles: I agree that a collapse of commodity prices would be serious, but it is not our view that this is going to take place, and the United States is a member of G.A.T.T. and will be taking part in those discussions.

Mr. Braine: Will my right hon. Friend not altogether dismiss this idea from his mind? Is it not a fact that, but for United States aid in various forms to the tune of between four billion and five billion dollars a year, the trade of the whole free world would be very much out of balance? Has my right hon. Friend considered the very serious effect on the sterling area producers of any further recession in the United States?

Sir D. Eccles: Yes, we have these things under consideration. It is open to us at any time to talk to the United States Government about them.

European Free Trade Area

Mr. Ellis Smith: asked the President of the Board of Trade, in view of the problems which will face the pottery in-

dustry when the proposals for the European Free Trade Area come into effect, what steps he proposes to take to enable this industry to become sufficiently modernised to meet world competition.

Sir D. Eccles: The record of the pottery industry since the war has been one of substantial and continuing modernisation. Exports for the year ended 30th September, 1957, were worth nearly £13 million and were more than 44 per cent. of total sales. In general, the industry is equipped to meet world competition.

Mr. Ellis Smith: I very much appreciate that reply. It will be encouraging. Is the President of the Board of Trade satisfied that when this European Free Trade plan comes into being the pottery industry will be in relatively the same position? If not, will he consider a new initiative with a view to stimulating interest in the problem in the indusry?

Sir D. Eccles: I can tell the hon. Gentleman that I am going to Stoke-on-Trent at the beginning of next month, when, no doubt, these matters will be discussed.

Mr. Ellis Smith: asked the President of the Board of Trade what action he proposes to take to improve the prospects of the industries most likely to be adversely affected by the setting up of a European Free Trade Area.

Sir D. Eccles: It is for every firm to assess the possible effects of the European Free Trade Area on its own products, and to plan how it can best adapt itself to take advantage of the opportunities of a wider market. The services of my Department are available to any firm which needs advice or information.

Mr. Ellis Smith: In view of our economic needs and the seriousness of our position, is it not out of date to leave it to firms? Ought not the Board of Trade to take the initiative by calling together the firms in each industry, to let them consider the problems all together?

Sir D. Eccles: We are consulting each industry through all the trade associations. The hon. Gentleman probably knows that imports of pottery are only 5 per cent. of home production and that the tariff on pottery coming in here does


not exceed about 5 per cent. Therefore, the pottery industry is in a very good position to take advantage of the European Free Trade Area.

Sir R. Jennings: Will my right hon. Friend consider issuing a very clear statement upon the effects of this European marketing scheme, because I find that in the country there is a great deal of misunderstanding, and the time has now arrived when my right hon. Friend should come out openly and let us know which industries will be affected and which not?

Sir D. Eccles: I do not think I could do what my hon. Friend wants because it depends upon the managements in the various industries whether they take full advantage of their opportunities or not.

Mr. H. Wilson: Since the Government refuse to publish a White Paper on this, will the right hon. Gentleman commend to his hon. Friend the Member for Hallam (Mr. R. Jennings) the most expert and authoritative document on this subject of the effect on our industries, issued by the Trades Union Congress?

New Industries, North Staffordshire

Mr. Ellis Smith: asked the President of the Board of Trade, in view of undertakings given by him on the closing down of the Swynnerton Royal Ordnance Factory, to what extent he has been successful in encouraging the opening or expanding of industrial concerns in the City of Stoke-on-Trent, with particular reference to the Newstead industrial site.

Dr. Stross: asked the President of the Board of Trade whether he will make a statement on his plans for new industries in Stoke-on-Trent.

Sir D. Eccles: The Board of Trade have brought the facilities for establishing new industry in North Staffordshire to the notice of industrialists and will continue to do so, but so far no definite result has been obtained.

Mr. Ellis Smith: Is the right hon. Gentleman aware that the municipality has done all it possibly can do in this respect, and will he give instructions to his officials that the municipal authorities should be encouraged by more concrete results?

Dr. Stross: is the President of the Board of Trade satisfied that there is a very special need for new industries in this city? If he is, will he use every power he has to encourage industrialists to bring their industries there? While doing so, will he bear in mind, too, that there is a very special problem associated with the two principal industries, mining and pottery, which cause us a large number of pneumoconiosis cases, and that this adds point to the request made?

Sir D. Eccles: I am aware of those circumstances, and we are trying now to interest one or two likely industrialists.

Mr. S. Silverman: Would the right hon. Gentleman call the attention of the Chancellor of the Exchequer to this problem, because the industries which will be especially affected and subjected to considerable new strains by the European Free Trade Area include industries like cotton which no one could call at the moment very greatly or very universally equipped with modern equipment? Will he draw the attention of the Chancellor of the Exchequer to the fact that the Government's present financial policy imposes upon those industries the greatest possible restriction in re-equipping themselves, and also upon the introduction of alternative industries, at the very moment when those industries most require to modernise themselves, and alternative industries are required?

Sir D. Eccles: While not accepting all hon. Member says, I will, of course, bring his remarks to the attention of my right hon. Friend.

Pottery (Purchase Tax)

Dr. Stross: asked the President of the Board of Trade to what extent the reduction of Purchase Tax on pottery from 30 to 15 per cent. has had a beneficial effect on home trade sales.

Sir D. Eccles: Home trade sales of domestic pottery were 11 per cent. greater in the six months ended 30th September, 1957, than they were in the corresponding period of 1956. I cannot say to what extent this increase was attributable to the reduction in Purchase Tax.

Dr. Stross: Has not the President observed the view of the industry itself that at least this coincides with the reduction in the Purchase Tax from 30 per cent. to 15 per cent.? In view of this,


will he take an early opportunity to discuss the matter with the Chancellor of the Exchequer and urge that the remaining 15 per cent. be now abolished?

Sir D. Eccles: Yes.

Lead

Mr. Cronin: asked the President of the Board of Trade why he decided last month to release 20,000 tons of lead from the United Kingdom stockpile.

Sir D. Eccles: Because it was no longer needed for strategic purposes and I was satisfied that disposal could be effected without disrupting the market.

Mr. Cronin: Is the right hon. Gentleman aware that the fall in prices of primary products exported from the sterling area is already a source of anxiety and that if the Board of Trade indulges in dumping prices will fall further still? Is he also aware that the United States tariff commission will shortly be examining the United States lead industry's case for raising tariffs and therefore his action will be a strong argument for raising them?

Sir D. Eccles: The hon. Member is a little unfair to use the word "dumping." We have been selling lead for some time at the rate of 3,000 tons a month, and we are now proposing to continue to clear out at that rate the 20,000 tons which remain. The price of lead happens to be only the same now as it was in 1954. I do not think that we can say that so small a proportion of the world's total production as we intend to sell is disruptive.

Mr. Cronin: What about the point on the United States tariff?

Sir D. Eccles: I have no reason to think that continuing disposals of so small a quantity of lead will make any practical difference to the United States tariff.

Hire-Purchase and Hiring Agreements

Mr. Cronin: asked the President of the Board of Trade if the Government will introduce legislation to replace the existing emergency powers in respect of hire-purchase and hiring agreements.

Sir D. Eccles: Yes, Sir, but I cannot say when.

Mr. Cronin: Will the right hon. Gentleman accelerate his consideration of this matter? Is he aware that there is already considerable confusion in the hire-purchase trade, as instanced by the seven different Orders which he promulgated during the last Session?

Sir D. Eccles: I have not had any representations about the confusion to which the hon. Member refers.

Armaments (Exports to Middle East)

Mr. Emrys Hughes: asked the President of the Board of Trade the total amount of exports from this country of armaments to the countries of the Middle East since the war.

Sir D. Eccles: Separate figures for military equipment sold to foreign countries are not disclosed. But exports of explosives (including industrial explosives), arms, ammunition, etc. (including some non-military material) and aircraft (including civil aircraft) to the countries of the Middle East in the period 1946–June, 1957, amounted to approximately £60 million.

Mr. Hughes: Will the right hon. Gentleman kindly forward those figures to the Foreign Secretary, who seems to think that the only country sending armaments to the Middle East is the Soviet Union? Can the right hon. Gentleman tell us whether the Soviet Union has sent less or more armaments to the Middle East than we have?

Sir D. Eccles: Not without notice.

Machine Tools

Mr. Edelman: asked the President of the Board of Trade whether his attention has been drawn to the decline in output of machine tools at Alfred Herberts, Ltd., Coventry, and the redundancy at Messrs. Wickmans, Ltd., Coventry, manufacturers of machine tools; and what action he has taken to stimulate output in the industry in view of the urgent demand in other industries as well as in the North American market for machine tools manufactured in this country.

Sir D. Eccles: Yes, Sir; in the case of certain types of machine tools demand has slackened over the past year. Output in general has been well maintained


and British exports to North America so far this year are 60 per cent. higher than last year, with the result that Canada and the United States are now among the industry's best overseas markets.

Mr. Edelman: Despite that fact, is the Minister not aware that the situation, generally speaking, is serious not only for Coventry but for the whole country? Is he aware that the level of orders for forward delivery of machine tools is lower than it has been since the war? In those circumstances and as the whole of industrial progress depends upon the machine tool industry, what concrete action will the Minister take?

Sir D. Eccles: It is true that orders are less for certain types of machine tools, but for the heavy machine tools they are still so large as to cause considerable anxiety. I think that the machine tool industry will run better if it has not quite such a long order book.

Oral Answers to Questions — NATIONAL FINANCE

British Writers (Dollar Earnings)

Captain Pilkington: asked the Chancellor of the Exchequer the total estimated Exchequer revenue from British writers who earn dollars from articles appearing in United States newspapers.

The Chancellor of the Exchequer (Mr. Peter Thorneycroft): I regret that this information is not available.

Captain Pilkington: Can my right hon. Friend say whether these people include Mr. Muggeridge, who gets his money by smearing other people, including the Queen, and should not this hysterical little Communist be induced to go to live in Russia?

Nationalised Industries and Roads (Investment)

Captain Pilkington: asked the Chancellor of the Exchequer his latest estimate of the amount of current investment in, respectively, electricity, railways, coal, gas, and roads.

Mr. P. Thorneycroft: The latest estimates for the current accounting years of the authorities concerned are: Electricity, £274 million; Railways, £120 million; Coal, £100 million; Gas, £59 million, and Roads, £25 million.

Captain Pilkington: Does not my right lion. Friend think that the figure for roads is very inadequate compared with the figures for the others, all of which would benefit if our road system were somewhat better than it is?

Mr. Thorneycroft: If my hon. and gallant Friend will look at what I said in the debate the other day, he will see that an increased allocation for roads is already made.

Furniture (Definitions)

Mr. John Hall: asked the Chancellor of the Exchequer if he has considered the representations made to him by the British Furniture Manufacturers Federated Associations on the subject of the anomalies in definitions of furniture; and if he will make a statement.

Mr. P. Thorneycroft: I have no statement to make on this subject at present.

Mr. Hall: Is my right hon. Friend aware that his reply will be very disappointing indeed, especially in view of the statement made by the Financial Secretary to the Treasury, in the debate on 28th May, that he would look at these anomalies with a view to trying to dispel them in the near future?

Post-War Credits

Mr. John Hall: asked the Chancellor of the Exchequer what consideration he has given to the possibility of accepting post-war credits in payment of Estate Duty.

Mr. P. Thorneycroft: I have considered this possibility but do not feel able to adopt it.

Mr. Hall: Is my right hon. Friend aware that there is a great similarity between Estate Duty and post-war credits? Is he aware that Estate Duty is a legalised confiscation and destruction of savings and that post-war credits are compulsory savings which are being fast destroyed by inflation? Would it not be fair to set the one against the other?

Hon. Members: Answer.

Deposits (Rate of Interest)

Mr. Osborne: asked the Chancellor of the Exchequer if he is aware that institutions calling themselves banks are advertising for deposits at 8½ per cent.


interest free of tax; and, since such a high rate of interest cannot be paid with safety, if he will take steps to prohibit the use of the term bank to such speculative ventures.

Mr. P. Thorneycroft: There is no power to prevent an institution describing itself as a bank though it may be prevented from including it as part of its registered name.

Mr. Osborne: But does my right hon. Friend consider any institution which can offer an interest of 8½ per cent. free of tax to be sound? Ought not some steps to be taken to safeguard ordinary people from being swindled of their hard-earned savings?

Mr. Thorneycroft: It is not for me to advise on rates of interest between individuals of that character.

Mr. H. Wilson: Surely the hon. Member for Louth (Mr. Osborne) has a point here. Will the Chancellor study the article on this subject in a special issue of the Manchester Guardian this morning? In the light of that, if he says that he has not the powers, will he introduce powers, because we can promise him a pretty easy passage for such a Bill?

Mr. Thorneycroft: My hon. Friend the Member for Louth (Mr. Osborne) may be right that there may be some case for examination of lending by institutions outside the banks, but that raises a very wide issue which I would not propose to deal with in this answer.

War Office Expenditure

Dame Irene Ward: asked the Chancellor of the Exchequer whether he will set up a special committee of inquiry into the system of financial control of War Office expenditure, in view of the recent report of the Committee of Public Accounts.

Mr. P. Thorneycroft: No, Sir. The Report of the Public Accounts Committee is now being examined and a Treasury Minute will be furnished to the Committee in the ordinary way.

Dame Irene Ward: When the examination has taken place, will my right hon. Friend let the House have an indication of the facts discovered and the actions taken? Would he not agree that to screw down a lot of people for small

amounts one way or another and allow a Government Department to waste money at the rate of millions of pounds does not really arouse a great deal of confidence in the financial control which his Department exercises over some Government Departments?

Mr. Thorneycroft: The normal procedure is for a Treasury Minute to be provided to the Committee of Public Accounts, which normally furnishes that as an appendix to one of its reports to the House of Commons. This has worked very well in the past and I think that we might stick to it.

Credit Facilities and Loans

Mr. H. Wilson: asked the Chancellor of the Exchequer if he is aware of the growth, since the intensification of the credit squeeze, on 19th September, of a black market in credit facilities and loans, at extortionate rates of interest, and involving borrowing from Zurich and other financial centres; and what action he is taking in the matter.

Mr. P. Thorneycroft: I am aware that any restriction on advances tends to encourage borrowing outside the normal banking system. I am also aware that foreign currency is once again tending to flow to London.

Mr. Wilson: While the right hon. Gentleman can make these generalisations, may I ask whether he does not study the evidence produced, for instance, in the City column of the Manchester Guardian, which had a very clear article on this with evidence of foreign currency flowing to London to take part in this black market at rates of 12½ per cent. and 15 per cent.? Will the right hon. Gentleman deal with a scandalous black market of this kind?

Mr. Thorneycroft: My principal troubles lately have not been to prevent foreign currency flowing into London.

European Free Trade Area

Mr. H. Wilson: asked the Chancellor of the Exchequer if he will publish a White Paper on the recent negotiations in Paris on proposals for a European Free Trade Area, including the text of all set speeches made by United Kingdom Ministers during those negotiations.

Mr. P. Thorneycroft: No, Sir. I know the right hon. Gentleman's desire to press forward with these negotiations, but I do not think that the publication of a White Paper would assist at this stage.

Mr. Wilson: Is the right hon. Gentleman aware that I am not concerned in these negotiations, except from the Opposition benches? On behalf of the Opposition benches, and I am sure on hon. Members on both sides of the House, may I say that we should like to know a little more of what the Government are doing, in our name? In these circumstances, will the right hon. Gentleman recognise that copies of speeches made by Her Majesty's Ministers in Paris were made available to the Press each night during the Paris negotiations and will the Government stop this practice under which a great deal more is given to the Press informally than is given to the House of Commons?

Mr. Thorneycroft: If too much information is being given away, I would try to help the right hon. Gentleman on that but I do not see how a White Paper would help before negotiations have actually started.

Mr. Wilson: But since we understand from the Press that the Government have made important pronouncements in the preliminary round at Paris, and since the Paris negotiations were themselves postponed from the spring to meet various requirements, which we understand, is it not about time that the House of Commons, which has not debated this subject since 26th November last year, should be brought into the picture? On behalf of those who really want to help these negotiations forward if they are reasonable, may I ask the Chancellor to realise that he will have more success by taking the House of Commons into his confidence than by withholding information from it?

Mr. Thorneycroft: If the right hon. Gentleman wants to take any of the ordinary opportunities for debate, there is nothing to prevent him doing so. [HON. MEMBERS: "Answer."]

Mr. Russell: asked the Chancellor of the Exchequer if he will ensure that any agreement on the establishment of a free trade area in Europe will allow relief to be given to hard-hit industries at least to the extent allowed by the Treaty of Rome.

Mr. P. Thorneycroft: I will take note of what the hon. Gentleman suggests and keep in touch with industry upon these matters.

Cheques Act (Receipts)

Sir W. Anstruther-Gray: asked the Chancellor of the Exchequer whether his attention has been drawn to the confusion with regard to receipting bills which has arisen following the Cheques Act; and whether he will clarify the position.

Mr. P. Thorneycroft: Section 3 of the Cheques Act, 1957, provides in effect that a paid unendorsed cheque is prima facie evidence of the receipt by the payee of the amount for which it is drawn. This puts paid unendorsed cheques in the same position as paid endorsed cheques; in no other respect has the law relating to receipts been changed.

Sir J. Duncan: asked the Chancellor of the Exchequer if he is aware that up to now receipted vouchers have had to be produced in support of maintenance claims, claims under Section 314 of the Income Tax Act, 1952, and other similar claims, and that in view of the passing into law of the Cheques Act this is no longer possible; and if he will make a comprehensive statement on the procedure to be adopted in the future, and arrange for this to be circulated to all those who may be concerned.

Mr. P. Thorneycroft: The Inland Revenue will accept an unendorsed paid cheque together with the unreceipted accounts or invoice; but nothing in the Cheques Act alters a person's right to require a duly stamped receipt for a payment of £2 or over.

Sir J. Duncan: Does this mean that if an unendorsed cheque and a bill which bears no evidence of payment on it are brought together, that will be accepted as evidence of payment by the Inland Revenue?

Mr. Thorneycroft: The Inland Revenue will accept an unendorsed cheque with the invoice as evidence of payment.

Lieut.-Colonel Bromley-Davenport: asked the Chancellor of the Exchequer why cheques, pay orders or vouchers in respect of payments by Government Departments to private individuals do not carry 2d. stamps and whether, in


view of the passage of the Cheques Act, he will arrange for these to be regarded as receipted if endorsed without the further addition of a 2d. stamp.

Mr. P. Thorneycroft: They are exempt from cheque stamp duty and in some cases, notably for payments to pensioners, from receipt stamp duty where they embody a form of receipt. I am circulating in the OFFICIAL REPORT extracts from a circular I have issued on this subject to Departments.

Following is the information:

Treasury Reference H.F. 338/466/01 D.A.O. 4/57

CHEQUES ACT, 1957

Cheques embodying a form of receipt

The practice of Departments generally is to require a receipt to be given on the back of cheques even when this receipt does not link the payment with the relevant transaction. Under the provisions of the new Act this practice is unnecessary and should not be adhered to after the coming into force of the Act except where the signature of the payee is required for a specific purpose, e.g., as a formal discharge of an obligation of a Department, or as evidence of life as in the case of pensioners.

Payable Orders

Section 3 of the Act does not cover payable orders and similar instruments used by Government Departments. The banks are aware that these payable instruments will still have to be signed by the payee.

The question of whether the principle of no endorsement should be applied to payable orders will have to be examined at some future date when sufficient experience of the working of the Act has accumulated.

Mr. John Hall: asked the Chancellor of the Exchequer if he is aware that relying on the provisions of Section 3 of the Cheques Act, 1957, the practice of giving receipts is dying out; and what is his estimate of the amount of revenue which will be lost as a result.

Mr. P. Thorneycroft: No precise estimate can be made.

Purchase Tax

Mr. Collins: asked the Chancellor of the Exchequer when he expects to complete the promised review of Purchase Tax anomalies.

Mr. P. Thorneycroft: I can give no undertaking. The alleged anomalies referred to in the Finance Bill debates

were numerous and full consideration must inevitably take some time.

Mr. Collins: Is the Chancellor aware of the considerable importance of this subject to industry? Will he bear in mind that the changes can be made by Order and need not await the Budget, and will he consider, in particular, publishing simple lists of taxed goods instead of the present very complicated Schedules of exclusions?

Mr. Thorneycroft: I recognise the importance of this subject and I will bear in mind what has been said by the hon. Gentleman and my hon. Friend, but I am not ready to make a statement at the moment.

Mr. Jay: Will the Chancellor at least say whether he agrees with the statement of the President of the Board of Trade in September that he favours a fiat rate of tax instead of the Purchase Tax?

Mr. Thorneycroft: There is no question of consideration being given to a fiat rate of tax and, as the right hon. Gentleman knows, the spreading of such a rumour would do a great deal of harm to just those interests about which his hon. Friend was talking.

Mr. H. Wilson: Yes, Sir, but since those rumours arose from a statement made by the President of the Board of Trade, reported in the Evening Standard, will the Chancellor pass on his admonition to his right hon. Friend sitting next to him?

Mr. Thorneycroft: I have taken the opportunity, in answer to a Question, to say that this is not under consideration, and I hope that attention will be paid to it.

Mrs. Castle: asked the Secretary to the Treasury whether he will take steps to ensure that vehicles subject to a speed limit of 30 miles per hour as goods vehicles are only subject to the appropriate rate of Purchase Tax for this type of vehicle.

The Financial Secretary to the Treasury (Mr. J. Enoch Powell): No, Sir. The considerations which govern classification for speed limit and for taxation are completely different.

Mrs. Castle: Is it not unfair that a vehicle should at one and the same time


be classed as a passenger vehicle for Purchase Tax purposes and a goods vehicle for speed limit purposes, thus getting the worst of both worlds? Could not the Government stake steps to co-ordinate these classifications, because the present conflict is a serious drawback to the motor industry?

Mr. Powell: There is not necessarily any relationship betwen the two classifications. For Purchase Tax purposes a vehicle which is constructed mainly for passenger transport must bear the appropriate rate.

Unpaid Taxes

Mr. Hornby: asked the Chancellor of the Exchequer what is the sum of taxes which were due for payment before the end of the last financial year and which are still unpaid.

Mr. P. Thorneycroft: The figure of the amount that is still unpaid is not available and it would take a disproportionate amount of time to find out. Customs duties which are still unpaid amount to approximately £¼ million.

Mr. Hornby: Is my right hon. Friend satisfied that all possible measures are being taken to prevent the accumulation of tax debts, particularly by people who are not covered by P.A.Y.E. schemes?

Mr. Thorneycroft: Yes, Sit. A good deal of the amount that is outstanding is, of course, subject to appeal.

Bank Rate Increase, September

Sir L. Plummer: asked the Chancellor of the Exchequer (1) to what persons outside Government service he authorised the communication on 18th September of any measures to be taken by him on 19th September;
(2) if he will state the names of Members of both Houses of Parliament, or ex-Members, other than members of the Government, who were seen on any official business connected with the Treasury or briefed by him or his representatives on Wednesday, 18th September.

Mr. P. Thorneycroft: No, Sir. I am glad to have this opportunity of saying that there was no leakage of the increase in the Bank Rate, that there was no brief about the Bank Rate, and it would I consider be quite inappropriate for me to

state whom I saw or for what purpose on this or any other day.

Sir L. Plummer: Does the right hon. Gentleman appreciate that the last part of his Answer will cause a good deal of concern and dismay, particularly in the City of London, where grave doubts are being expressed about the propriety of the way in which the Bank Rate change was announced? Will he now make a further specific and categorical statement as to whether or not prior information of his intentions was given to an ex-Member of this House, namely, Mr. Oliver Poole?

Mr. Thorneycroft: Prior information about the Bank Rate was given to no one who was not inside my Department or my own advisers. Prior information of that kind was not given. May I say this to the hon. Gentleman? If he had information which he thought raised any suspicion, he should have made it available to the Lord Chancellor and should not bandy it about here.

Mr. H. Wilson: Does not the Chancellor's refusal to answer this Question in the way it is put throw the most surprising light—[HON. MEMBERS: "No."]—the strangest light on the Prime Minister's refusal to order an inquiry? Will the right hon. Gentleman now tell the House: did he or any representative of the Treasury see Mr. Oliver Poole on Wednesday, 18th September?

Mr. Thorneycroft: If the right hon. Gentleman will reflect a moment—[HON. MEMBERS "Answer the question."] This is a serious matter—[HON. MEMBERS: "Hear, hear."] If the right hon. Gentleman will reflect a moment, he will realise how inappropriate that question really is, because if I were to state that in those days of pressure upon sterling, the T.U.C. had been seen—or the Chairman of the Conservative Party or even a right hon. Gentleman on the bench opposite—there is no doubt whatever that it would be used in some quarters to suggest that someone in that position had used for his own purposes some information which he had got, and for my own part I do not propose to pander to gossip of that kind.

Mr. Wilson: Will the Chancellor now answer the question? Since he saw me a week before Bank Rate went up, before the decision was taken, we are asking him whether he saw anybody the afternoon after the Bank Rate decision


was taken and before it was known to the public generally? Will the right hon. Gentleman inform the House of the inquiries he has made about the sales of gilt-edged, and whether any of them were undertaken by companies connected with any of the people whom he saw, or any other representative of the Treasury saw, on Wednesday afternoon?

Mr. Thorneycroft: This matter was fully dealt with in the letter which my right hon. Friend the Prime Minister sent to the Leader of the Opposition. [HON. MEMBERS: "Answer."] I have nothing whatever to add.

Mr. Wilson: But, Mr. Speaker, since the right hon. Gentleman said it was fully dealt with, is he aware that that letter dealt with only one or two specific and very minor pieces of evidence which we put before the Prime Minister—[HON. MEMBERS: "Hear, hear."]—which it was our duty to put before the Prime Minister, because we had it? We had no idea at that time that there was any suggestion that the right hon. Gentleman had seen the Vice-Chairman of the Conservative Party. Will he not now, in order to allay public anxiety on this matter, state clearly whether he did or did not, or any other Treasury representative did or did not, see the Vice-Chairman of the Conservative Party, who has vast City interests, the day before Bank Rate went up?

Mr. Thorneycroft: The letter dealt with every scrap of evidence which the right hon. Gentleman put forward.

Sir R. Jennings: Will the Chancellor appreciate that masses of people in this country will agree with his view not to be drawn into a mare's nest by opening any inquiry?

Mr. Speaker: Order. If this matter is to be pursued, it should be pursued at another time. Otherwise it will take up too much of valuable Question Time.

Mr. J. Griffiths: May I repeat the question to the Chancellor, Mr. Speaker? [HON. MEMBERS: "No."] In the circumstances, may I ask the Chancellor whether he will now say, did he or did he not see Mr. Oliver Poole on this date?

Mr. Thorneycroft: I have already given a full answer to this. [HON. MEMBERS: "No."]

Mr. Wilson: Mr. Speaker, since the right hon. Gentleman said that the Lord Chancellor dealt with every piece of evidence submitted to him—and of course, we are all prepared to accept that fact—is he aware that this question about Mr. Oliver Poole was not submitted to the Lord Chancellor? Will he now recommend to his right hon. Friend the Prime Minister—because it has only come up now and because we gave all the evidence we had to the Lord Chancellor—the need for a full inquiry, on oath, on all the circumstances arising out of this unfortunate matter?

Mr. Thorneycroft: If the right hon. Gentleman has any evidence at all which he thinks discloses any impropriety, it was his duty at the time to place it before the Lord Chancellor, and I may say that it is his duty now.

Mr. Speaker: Mr. Jay.

Mr. Jay: But could not the Chancellor clear up the whole of this matter—[Interruption.] Could he not clear up the whole of this matter—

Mr. Speaker: Order. I called the right hon. Gentleman because I wanted him to ask Question 32, but he is entitled to say what he likes.

Mr. Jay: I was about to ask the Chancellor if he could not clear up the whole matter to the satisfaction of both sides of the House by denying that he saw Mr. Oliver Poole on that day.

Mr. Speaker: Mr. Jay. Question 32.

Sir P. Agnew: rose—

Mr. Speaker: Question 32.

Sir P. Agnew: With great respect, Mr. Speaker, I did not understand whether you had called Question 32. If you had not, I was going to submit, with the greatest respect, that in view of the interests of hon. Members who have a great many Questions down on the Paper—[Interruption.]

Mr. Speaker: Order. I have called Question 32.

Dividends (Limitation)

Mr. Jay: asked the Chancellor of the Exchequer whether he will now introduce compulsory limitation of dividends.

Mr. P. Thorneycroft: No, Sir. I do not intend to fix either dividends or wages.

Mr. Jay: As the Government, and the Minister of Health, in particular, are now compulsorily limiting wages, how can it be fair not to do the same with dividends?

Mr. Thorneycroft: My right hon. Friend is not fixing wages, and I cannot agree with the right hon. Gentleman's desire to fix all money incomes in this country.

Several Hon. Members: rose—

Mr. Speaker: We really must get on. Mr. Vane.

Patent Royalties (Income Tax)

Mr. Vane: asked the Chancellor of the Exchequer whether he is satisfied that the present law affecting Income Tax payable on royalties derived from patents is so framed as to encourage inventors to develop their work in this country rather than take it abroad.

Mr. P. Thorneycroft: Patent royalties received by a resident in the United Kingdom are liable to Income Tax wherever the patent is exploited.

Mr. Vane: Will my right hon. Friend look into the whole matter again before next year's Finance Bill to ensure that inventors whose work is most important to the industry of this country are not subjected to temptation to take the fruits of their inventions overseas for exploitation? By that I mean serious inventions which are of value to the interests of this country, not the dirt and scandal which hon. Members opposite are trying to invent here this afternoon.

Mr. Thorneycroft: I will certainly bear in mind any representations which my hon. Friend wishes to make.

Government Employees

Captain Pilkington: asked the Chancellor of the Exchequer to how many people, approximately, and in what categories, the Government pay wages.

Mr. P. Thorneycroft: As the Answer involves a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.

Following is the information:

The Government at present pay wages or salaries to about 1,913,000 people—industrial and non-industrial civil servants in this country and overseas, and serving members of Her Majesty's Forces. The figure is made up as follows:


Civil Service


Non-industrial staff
651,000


Industrial staff
408,000


Locally engaged non-industrial staff abroad
39,000


Locally engaged industrial staff abroad
113,000


Civil Service total
1,211,000


H.M. Forces (Regulars) and National Service men
702,000


Grand total
1,913,000

Aircraft (Spirits and Tobacco)

Mr. Dodds: asked the Secretary to the Treasury in how many cases since 1st January, 1957, the Customs and Excise authorities have found British European Airways aircraft returning to this country with their bars overstocked with spirits and tobacco; in how many cases the stocks have been impounded; and, as aircraft are as a result flying with insufficient stocks, what consultations he has had, with a view to finding a satisfactory solution to the problem.

Mr. Powell: The quantity of duty-free spirits and tobacco issued to an aircraft going abroad is limited by law to the reasonable needs of its complement during the flight. There is no question of impounding stores which are brought back, or have been purchased abroad, but the bar-boxes are kept under official control until they can be allocated to outgoing aircraft entitled to the quantity of stores they contain. The scales of permitted stores have several times been adjusted following discussion with British European Airways.

Mr. Dodds: is the hon. Gentleman stating that there have not been any meetings of Government Departments recently to deal with this problem because of complaints by B.E.A.? Is it not true that the scales are governed by a law 200 years old which applied to sailing ships and permits the possession of 1 oz. of duty-free tobacco and a ¼ pt. of spirits per passenger? If that is correct, does it measure up to modern standards having regard to what other aircraft carry?

Mr. Powell: The scales which are applied to aircraft have been designed for aircraft and have been discussed, as I have indicated, several times with British European Airways.

Oral Answers to Questions — CIVIL SERVICE

Clerical Association's Proposals

Mr. Wade: asked the Chancellor of the Exchequer what steps he proposes to take to increase the efficiency of the working of the Civil Service along the lines of proposals submitted to him by the Civil Service Clerical Association earlier this year.

Mr. P. Thorneycroft: The Civil Service Clerical Association's proposals have been under examination by the Treasury and some of the big employing Departments. The indications so far are that they would not produce significant reductions of staff, and that the net result would be to increase the cost of the Service. Further investigations will be made before final conclusions are reached.

Mr. Wade: Does the Chancellor agree that where employees, whether civil servants or others, put forward proposals designed to save manpower and to increase efficiency, they should be given every possible encouragement? Can he give an assurance that the proposals referred to in the Question will not be pigeon-holed?

Mr. Thorneycroft: Such proposals should certainly be encouraged and examined, but if they cost more it is probable that they ought to be rejected.

Pensions (Temporary Service)

Dame Irene Ward: asked the Chancellor of the Exchequer why temporary service in the Civil Service before 1st January, 1919, is not counted as to one half in assessment for pensions; and whether he will alter this date.

Mr. P. Thorneycroft: Because one of the objects of the provision of the Superannuation Act, 1946, which precludes the reckoning of pre-1919 service, was to cater for those who entered the Civil Service in the 'twenties and 'thirties under special schemes for ex-Service men of the 1914–18 war. The answer to the second part of the Question is "No."

Dame Irene Ward: As my right hon. Friend is supposed to be examining proposals for dealing with small fixed income groups, is this one of the proposals which he will have re-examined? Is he aware that the ex-Service men's associations, whose views are now reflected in the representations that are being made, fully support the proposal that the date should be altered from January, 1919? Will he reconsider the point?

Mr. Thorneycroft: I have given the reason why this date was chosen, but I would never refuse to examine anything that my hon. Friend put to me.

Mr. T. Williams: Will the right hon. Gentleman tell us approximately how many persons are involved in the subject of the Question, and what the concession would be likely to cost the Treasury?

Mr. Thorneycroft: Not without notice.

Oral Answers to Questions — LOCAL GOVERNMENT

Housing (Interest Rates)

Mr. Frank Allaun: asked the Minister of Housing and Local Government by how much the weekly rent of a corporation house or flat costing £1,800, the loan for which is repayable over sixty years, will be increased by the latest increase in interest rates; how many local authorities have informed him of a reduction or ending of their housing programmes; and if he will take steps to reduce the greatly increased burden of interest charges.

Mr. Blenkinsop: asked the Minister of Housing and Local Government how many local authorities have informed him of their intention of reducing their slum clearance and old people's housing programmes since the announcement of a 7 per cent. Bank Rate.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. H. Brooke): Local authorities are responsible for fixing rents, and the effect on rents of the recent increase in interest rates will depend upon the policy of local authorities. Some nineteen local authorities have informed me of their decision to reduce their housing programmes. There have been reports in the Press that a number of others have taken similar decisions.


In answer to the third part of the Question from the hon. Member for Salford, East (Mr. Frank Allaun), I would refer him to my statement during yesterday's debate.

Mr. Allaun: If the Minister really understands the misery of hundreds of thousands of families who have already waited up to twelve years on housing lists, why does not he resist within the Cabinet this slaughter of the housing programme?

Mr. Brooke: This is a matter which we debated at length yesterday, and the Opposition had a rather bad day.

Oral Answers to Questions — N.A.T.O. MEETING, PARIS (PRESIDENT EISENHOWER'S VISIT)

Mr. Lewis: asked the Prime Minister whether he will take the necessary action to extend an invitation to President Eisenhower to visit this country during his forthcoming visit to the North Atlantic Treaty Organisation Council meeting in Paris, and further take the opportunity of inviting the heads of state of France and the Union of Soviet Socialist Republics to visit this country to enable talks to ensue on international problems concerning difficulties between the countries of the world, thus easing international tension.

Mr. Lipton: asked the Prime Minister whether he will invite President Eisenhower to visit this country in December.

The Prime Minister (Mr. Harold Macmillan): We would much welcome a return visit to this country by the President of the United States. I know that the President is aware of this. He has, however, informed me that to his great regret he cannot make such a visit on this particular occasion.

Mr. Lewis: While I appreciate that, for reasons best known to himself, the President cannot make it on this occasion, will the Prime Minister bear in mind the suggestion and take an early opportunity to arrange such a discussion?

The Prime Minister: Yes, Sir. I am sure the whole country would welcome a return visit by the President after the visit of Her Majesty to the United States,

but, as I feel the hon. Gentleman will understand, a good deal of advance planning is necessary and such a visit has to lit with other commitments.

Mr. Lipton: Is the Prime Minister aware that, according to a statement issued from 10, Downing Street, it appears that the President's next visit must be a State visit and that is the reason why he cannot call here on his way back from Paris? Will he nevertheless make it clear that if the President wants to pay an unofficial visit to London he will be just as welcome as if he comes on a State visit, and if Mr. Khrushchev wants to drop in at the same time, so much the better?

The Prime Minister: Yes, Sir, but I think it would be the wish of the President of the United States that his visit should be carried out in a manner worthy of a return visit to that of Her Majesty the Queen to the United States.

Oral Answers to Questions — SUDAN (GEZIRA COTTON CROP)

Mr. Brockway: asked the Prime Minister what conclusions were reached in the official discussions which he had with the Prime Minister of the Sudan regarding the difficulties which have arisen in the disposal of the cotton crop of the Gezira.

The Prime Minister: My right hon. Friends and I had very useful discussions with the Prime Minister of the Sudan, but regret that I cannot, without a breach of confidence, disclose the conclusions reached.

Mr. Brockway: Is the Prime Minister aware that the Gezira scheme is one of the greatest British achievements in Africa? Will he do his utmost to secure that that scheme is maintained by enabling the cotton produced by it to be sold at a rate which is acceptable to the Sudan?

The Prime Minister: Yes. I am sure that we are all very anxious that that should be achieved. As the hon. Member knows, there is much good will in Lancashire towards the Sudan, and I am sure that, provided prices are competitive, Lancashire will continue to be an important market for Sudanese cotton.

Oral Answers to Questions — WALES (GOVERNMENT ADMINISTRATION)

Mrs. White: asked the Prime Minister what decisions have been taken concerning the proposals made in the last Report of the Council for Wales concerning Government administration in the Principality.

The Prime Minister: I am well aware of the desire in Wales for an early announcement, and I hope to make a statement shortly.

Mrs. White: Can the right hon. Gentleman expedite this statement? The Report of the Council for Wales was issued in January last and we were asked to debate it in this House as a matter of some urgency early in February. We hope that we shall have the promised statement very soon indeed.

The Prime Minister: I will do my best.

Oral Answers to Questions — ATOMIC ENERGY (MINISTERIAL RESPONSIBILITY)

Mr. G. R. Strauss: asked the Prime Minister whether, in view of the fact, as disclosed by the recent accident at Wind-scale, that the responsibility for atomic energy matters involves much detailed study of highly technical problems, he will consider transferring that responsibility from himself to a senior Minister in the House of Commons.

The Prime Minister: No, Sir; I consider that the existing arrangement is the most suitable at the present time.

Mr. Strauss: Does not the Prime Minister agree that it is wrong in principle that a Prime Minister, who is bound to be burdened with many matters of broad and important policy, should be burdened with the detailed affairs that are bound to arise from time to time in an organisation such as the Atomic Energy Authority?

The Prime Minister: I think that there are disadvantages but, on the whole, at the present time, when the various uses of atomic power are so much in the field that the Prime Minister of the day must in any case have under his control, I think there are advantages, and that it works pretty well. With regard to the

detailed work, I am very much helped in discharging it by my right hon. Friend the Paymaster-General.

Oral Answers to Questions — CIVIL SERVICE (SECURITY)

Mr. W. Griffiths: asked the Prime Minister whether he will give directions that, in dealing with Civil Service security cases, there should be no accusations about the wife of a civil servant which are not supported by detailed charges and that, where such accusation and detailed charges are made, a reply will be sent by the responsible Minister to any representations made by, or on behalf of, the lady.

The Prime Minister: I would remind the hon. Member that the statement of procedure announced to the House on 30th January, 1957, makes it clear that supporting evidence has to be limited by the need to avoid the disclosure of sources of information. The Minister will, of course, communicate such information as he thinks compatible with this requirement.

Mr. Griffiths: Is the Prime Minister aware that while the majority of us recognise the need for an official security procedure, nevertheless there is growing concern at the practice which is developing whereby a civil servant can be suspended, or an industrial worker sacked, because for example his wife is accused of being a Communist sympathiser? Husband and wife may indignantly deny this charge, but no evidence is brought against either of them and they are not given any chance at all of establishing their innocence. Is not this contrary to all British practice?

The Prime Minister: The Question was framed in general terms, and I therefore replied to it, as I thought the hon. Member would wish, in general terms. If he has in mind any particular case, perhaps he will bring it to my notice or that of the Minister concerned.

Oral Answers to Questions — SMALL FIXED INCOME GROUP

Dame Irene Ward: asked the Prime Minister if he will give an assurance that, in formulating a policy to assist those living on small fixed incomes, he will call for proposals from the Treasury, the


Minister of Defence, the Minister of Education, the Minister of Health, the Secretary of State for the Home Department, the Minister of Pensions and National Insurance, the Minister of Housing and Local Government and the Minister of Labour; and when he hopes to present composite proposals.

The Prime Minister: I already have available advice from these and other Ministers in the formulation of Government policy. The greatest assistance to those living on small fixed incomes would come from the firm support of the Government's measures for dealing with inflation.

Dame Irene Ward: Is my right hon. Friend aware that he gave a very specific pledge at Brighton? Is he aware that that pledge was taken to mean that he would be putting forward proposals? I am asking him today, as a suitable day now that a new Session has started, if he will kindly inform me when he proposes putting forward the proposals which he indicated that he would put forward. Nothing else will suit.

The Prime Minister: Much as I should like to discuss this matter with my hon. Friend, I think that it would be a mistake for me to keep any declaration entirely to her. I would point out, however, that the financial position of pensioners is to be dealt with, I believe, tomorrow, and that in past years very important measures have been taken in successive Budgets, all of which tend to reduce the taxation upon small incomes.

Mr. Woodburn: If this new policy is going to cure inflation, will the Prime Minister tell us whether it has been the action of the policy of the last six years that has caused it?

The Prime Minister: No, Sir. The right hon. Gentleman knows as well as I do that although rewards, by way of wages and salaries, have kept well above the rise of prices, there is the problem of the pensioner and the fixed income, and it is for that reason that we are now trying to see whether, by a united effort, we cannot hold the present position.

Dame Irene Ward: Brighton was after the Budget.

Oral Answers to Questions — NUCLEAR TESTS

Mr. Mason: asked the Prime Minister to what extent it is the intention of Her Majesty's Government to test only radioactively clean bombs during the next test series at Christmas Island.

Mr. Beswick: asked the Prime Minister what is the purpose of the new series of nuclear tests at Christmas Island; how many detonations will take place; what is the approximate period over which the tests will take place; and if he will make a statement.

The Prime Minister: The purpose of this single test carried out in the Pacific was to make further progress in the development of megaton weapons following the initial tests earlier this year. There will be no further tests in the immediate future. It would not be in the public interest for me to give further details. I can, however, repeat the assurance already given that the additional radioactive fall-out resulting from the test will, as on the last occasion, be negligible.

Mr. Mason: There is bound to be a poisoning of the atmosphere following this test. In view of the fact that we have now had a series of atomic and hydrogen bomb tests of various sorts, is it now necessary to continue?

The Prime Minister: I said in my reply that there will be no further tests in the immediate future.

Dr. Summerskill: Can the Prime Minister say whether the appropriate committee of the Medical Research Council has agreed that the fall-out of these bombs is harmless?

The Prime Minister: All the scientific knowledge that I have been given confirms that with regard to both the last occasion and this one the radioactive fallout will be negligible.

Oral Answers to Questions — NUCLEAR WEAPONS AND GERMAN UNIFICATION

Mr. Zilliacus: asked the Prime Minister (1) whether, in view of the statement on 22nd May by Sir Christopher Steel, Her Majesty's Ambassador in Bonn, that the stationing of United States nuclear bases in this country would make it a target for nuclear


attack, and also of his reply to the hon. Member for Gorton on 31st October, he will renounce the manufacture of hydrogen bombs, prohibit the use of British territory for launching nuclear missiles, and propose a summit conference to discuss proposals for unifying Germany within an all-European treaty, but outside the rival alliances;
(2) whether he will take the opportunity of President Eisenhower's forthcoming visit to Paris and of Mr. Khrushchev's proposals for a summit conference, to issue invitations for a conference of the 1955 Geneva Powers to discuss the banning of hydrogen bomb tests as a first step to general disarmament, and the unification of Germany within an all-European Treaty based on the Charter but outside the rival military alliances.

The Prime Minister: No, Sir. Her Majesty's Government have made clear to the Soviet Union in the United Nations Disarmament Sub-Committee their views on nuclear disarmament and the suspension of nuclear weapon tests, but the Soviet Delegation has rejected the Western proposals without discussing them.
My right hon. and learned Friend put forward in some detail our views about the usefulness of what is called a summit conference in the debate on Friday. I have nothing to add.

Mr. Zilliacus: Is not the present position that the stationing of American nuclear bases in this country, on the Government's own showing, attracts nuclear attack, and that the Government have given up any attempt to defend this country against nuclear attack and have concentrated on defending the nuclear bases? Furthermore, is it not a fact that by insisting on the inclusion of Germany in N.A.T.O. the Government have made impossible any settlement in Europe which would obviate the danger of such attack?

The Prime Minister: Those are all propositions of considerable importance, but they are very debatable. With regard to American bases, the policy dates from the Government of the present Lord Attlee. I inherited and continued it. With regard to the second proposal. I should think that the general view of this House was that the inclusion of Germany in N.A.T.O. was in conformity with all the purposes of that organisation.

Oral Answers to Questions — ATOMIC ENERGY ESTABLISHMENT, WINDSCALE (ACCIDENT)

Mr. F. Anderson: asked the Prime Minister (1) by whose decision the public generally was informed of the radioactivity dangers arising out of the accident to Windscale No. 1 Pile; and why the warning was not given to the public until almost 24 hours had elapsed;
(2) on what date and at what time the school authorities in the Windscale area were informed of the radioactivity dangers arising from the accident on 10th October.

The Prime Minister: The general public and the school authorities were not directly informed at the time of the accident because at no time did the measured radioactivity in the air or on the ground approach a level at which the public might be at risk. This is made clear in the White Paper published on Friday.

Mr. Anderson: Is it not a fact that the decision could not be taken locally, as to when information should be given to the public but had first to be referred to the headquarters of the A.E.A.? May I ask if the responsibility for giving notice to the public rests entirely with the local management at Windscale?

The Prime Minister: On that point I should like notice. With regard to the general question, I think the House accepted broadly the policy which I put forward on Friday to deal with this matter. The White Paper gave very full information on the whole range of the problems involved and I look forward to the work which Sir Alexander Fleck will do in his three Committees to correct any procedure which is wrong or to tighten any weakness that reveals itself.

Mr. Woodburn: On a future occasion would the Prime Minister pay tribute to the heroism exhibited by some scientists in preventing this from becoming a real disaster, and express appreciation of what has been done?

The Prime Minister: I did that in my statement on Friday, but I am very glad that the right hon. Gentleman should give me an opportunity of repeating that tribute.

MEMBERS' SPEECHES (LENGTH)

Mr. Ellis Smith: We are at the beginning of a new Session, Mr. Speaker, and I desire to raise with you a point of procedure. I do so in order to have the benefit of your advice and to ask you whether I am correct in what I am about to say. According to the latest edition of Erskine May, hon. Members must be on their guard to enable us to safeguard free speech, and in my view we are in danger of that being filched from us.
Yesterday, in the debate upon a highly controversial question, three Members occupied approximately 180 minutes—

Mr. Nabarro: All Socialists.

Mr. Ellis Smith: The hon. Member should be sure of his facts before he makes an interjection.
Others who are in a preferential position took advantage of their position. If we are to act as a democratic institution, I wish to ask you, Mr. Speaker, whether you will consider whether the time has arrived when the position of back benchers should be safeguarded?
It is well known that there is deep feeling in the big industrial areas on the question of housing. In the City of Stoke-on-Trent, where we have, relatively, one of the best housing records in the country, it is no longer possible for the local authority to spend a penny on slum clearance. I wish to ask, therefore, first, whether you agree with my line of reasoning and whether you will make some observations on it, and, secondly, what you consider to be a reasonable time to take to speak—15 minutes, 20 minutes, or what?

Mr. Speaker: I hesitate to express an opinion as to what is a reasonable time for a speech. My opinion on that subject might be very much at variance with the views of many hon. Members. I think I know to what the hon. Member refers with regard to yesterday's debate, but I

would urge him not to be censorious about the speeches of those who speak from the Front Benches—I believe that that really is the point. After all, those who speak either from the Front Opposition Bench or from the Government side are discharging what is to them an exacting and responsible task. They are speaking for their parties and, in the case of the party in office, for the Government. I do not think that one should view the matter too strictly or censoriously.
Hon. Members who sit behind these right hon. Gentlemen can help me in my anxious desire to enable as many hon. Members as possible to take part in the debate. I may mention that it is a great grief to me when the clock beats me and I cannot allow as many hon. Members to speak as I should like. The only advice I would give is for hon. Members to show to those whose conduct they may think a little tedious the good example of brevity in their own speeches. After all, brevity is probably the one attribute of a good speech which is within the power and ability of us all.
I would urge hon. Members to refrain as much as possible from interrupting each other's speeches, because I have frequently seen the smouldering fires of an hon. Member's oratory, as it were, revived and stoked up again by an interruption. Certainly, interruptions do sometimes make a speech more discursive than the hon. Member who has the Floor intended it to be. Apart from that, there is nothing within my power that I can do to help the hon. Member.

Mr. S. Silverman: I am sure that the House is extremely grateful for what you have said, Mr. Speaker. But to add even further clarification to the explanation which we have all followed with great interest and sympathy, may I ask whether it would be right to say that in your opinion any quality of a good speech which we can all share applies as much to speakers from the Front Benches as to speakers from the back benches?

Mr. Speaker: Mutatis mutandis that is so.

Orders of the Day — QUEEN'S SPEECH

DEBATE ON THE ADDRESS

[SIXTH DAY]

Order read for resuming adjourned debate on Question [5th November]:

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Lady Tweedsrnuir.]

Question again proposed.

3.38 p.m.

Mr. Hugh Gaitskell: I beg to move, at the end of the Question, to add:
but humbly regret the omission from the Gracious Speech of policies designed to increase production and productivity and to establish better relations in industry.
In moving this Amendment, Mr. Speaker, may I express the appreciation of, I am sure, the whole House for the words of wisdom which you have just given us on the length of speeches?
The Amendment expresses shortly and clearly a major criticism and anxiety on the part of the Opposition about the Government's latest economic policies. We do not believe that reference to production and productivity and to the need for better relations in industry was omitted from the Gracious Speech just by accident. It is all too much of a part with what the Government have been doing and saying in the last few weeks.
In underlining the importance of those two subjects I wish to make it plain that, on the Opposition side, we are in no way indifferent to the matters actually referred to in that paragraph of the Speech which deals with economic policy, namely, to the need for
…restraining inflation, to strengthen our balance of payments and to fortify our reserves.
Indeed, on many occasions we have ourselves underlined the significance of those objectives. But we believe that the diagnosis of the Government in the present

situation, if, indeed, one can call anything that has been said by the Chancellor of the Exchequer by that name, and also the remedies which he proposes to apply, are not only wrong but are dangerous to the health of our economy.
I observe that no Minister representing the Treasury is to speak in the debate today. Seeing that this is an Amendment which goes, I should have thought, to the heart of the Government's economic policy, that is a little surprising. Nor is any representative of the Ministry of Labour taking part in the debate. Instead, we are to have the Home Secretary and the Paymaster-General. We are always glad to welcome old faces back again into economic debates. I am sure that the old firm will do themselves justice this afternoon and this evening.
There have been rumours of a certain lack of enthusiasm on their part towards the new policies of the present Chancellor of the Exchequer. Be that as it may, looking back on the years when they presided at the Treasury, and allowing for the passage of time, I cannot help looking upon their presence with a kindlier eye. At least, one can say of them that they did not say or do so many foolish things in such a short time as the present Chancellor of the Exchequer has done. Or, if they did, they certainly tried to explain why they were doing it.
I do not propose, however, to spend much of my time this afternoon on the past record of the Government. My right hon. and hon. Friends last week put forward devastating criticisms on that particular matter. I would just say that if the Chancellor of the Exchequer's policy today is right, then the fact that it had to be adopted, together with the speech of the Chancellor on 29th October, is a far greater indictment of the Government's policy than anything we can say from these benches.
Consider these facts. Less than six months after a Budget in which the Chancellor of the Exchequer took the view that there was room for manoeuvre, and in which he gave away £100 million to carefully selected recipients, and within six weeks of a debate on inflation in which no announcement of policy was made other than the setting up of the council of the so-called "Three Wise Men", we are confronted with a drastic change of policy, with a speech which indicates that


the nation faces an economic situation of the utmost gravity, and a series of warnings of the difficult times through which we now have to pass. At the very least, these indicate the gravest errors of judgment on the part of right hon. Gentlemen, or a deplorable lack of candour during the Chancellor's Budget speech, or perhaps just hopeless confusion.
The consequences of the new policy in the particular field of housing were discussed very fully yesterday. It is our business today to discuss its wider implications for the economy as a whole. As I take it, the aims of this policy are twofold. First, the Chancellor came to the conclusion, and announced on 19th September, that it was necessary to reduce demand at home, and, in particular, to cut back the rise in investment which had hitherto been planned. Further, he came to the conclusion that it was necessary to take fresh action by monetary means to stop what is sometimes called the "cost spiral" or the "wage-price spiral". I wish to examine the policy and its effects upon our economy.
The first question we have to ask ourselves is: what will the effect of this policy be upon production? However we may differ on other matters, I do not think that there will be any dispute in any quarter of the House that a high level of production and productivity is absolutely vital to our economic future. It is one of our quarrels with the Government that they have never indicated exactly what they think the consequences of this policy will be on production.
I can conceive of circumstances in which it might be argued that even policies as drastic as this would not necessarily lead to any fall in production. We might have a situation of acute demand-inflation, where prices were rising very rapidly, there was a balance of payments crisis, and the additional outpouring of money from the banks or from the Government or private spending was leading only to depletion of stocks or the piling up of orders. Therefore, if we were to cut down there would be no harm to production, but simply—so to speak—a creaming off of the flow of money towards goods. Are the Government saying that that is the situation with which we are now faced?
I ask the House to look back over the past few years at the production record.

The production increase since 1951 has been half the annual rate it was in the previous six years. Between 1951 and 1956 the total increase was 15 per cent., an average of 3 per cent. for the five years, and almost the lowest of any industrial nation. From the spring of 1955 to the spring of this year there was no rise in production whatever. Indeed, the Chancellor defended this situation in his Budget speech. I quote some of the words which he used when describing the position in 1956. He admitted that there was
a check to the growth of industrial production,
but said:
It is a picture not of industrial apathy but of a nation girding itself for renewed and greater effort.
He went on to make a valid point with which I do not quarrel at all. He said:
While we deliberately used our industrial capacity less intensively in 1956 than in 1955, the capacity itself was growing. It was growing because investment was maintained at a high level. We were building the means to produce more and to produce it for export markets. The process of economic growth cannot be absolutely regular. There will be years of growth and years of consolidation. Our long-term growth will be all the sounder for the consolidation we undertook in 1956."—[OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 968.]
That was the Chancellor's defence of stagnation of production in that year, but which was, as I say, spread out over two years.
Is the Chancellor saying to us that within four months of the rise in production beginning again—it began in May—we have reached the limit of our capacity? Is he saying that when production has been rising approximately at a rate of only 3 per cent. over 1956, and was slightly lower than 1955, we are stretched to the limit? If that is so, it is a very depressing prospect indeed for the whole country. When faced with this fresh measure of restriction, one is bound to ask when we are to have an expanding economy again. At the very moment that output is picking up—as, indeed, we expected it would and most of us said in the Budget debate it would—down comes the Chancellor and clamps down once more. Is he saying that he had to do this because demand had so far outrun supply that there was a grave danger of more inflation?
In deciding our policy in this situation another thing we have to do is not merely to look back, but to look forward. We have to ask ourselves what the prospects will be and what is likely to happen in the absence of any new policy by the Government. What does that prospect indicate? Does it suggest, for instance, that in 1958, apart from these last measures, there is likely to be any great increase in the volume of investment orders placed in industry? I submit to the Chancellor and to the House that a study of the available evidence suggests in fact precisely the contrary.
I will quote, first, something which was published recently in the Financial Times about the prospect in industrial building which, after all, is a key part of investment. This is what the industrial correspondent of the Financial Times had to say on 11th October, 1957:
Industry has cut back its plans for building new factories and modernising existing plants. The numbers of schemes approved so far this year and the factory floor area they represent are both the lowest for four years.
The latest estimates for capital spending in manufacturing industry, which were prepared just before Bank Rate was raised to 7 per cent., forecast a 10 per cent. fall this year and another fall of 9 per cent. next year.
But, since building costs have been rising—and are still going up—the actual fall in work done will be greater than the spending figures suggest.
The building industry is certain that if new estimates were available today they would, in the light of the Government's latest measures, show an even bigger fall.
That is the prospect for industrial building. I make no reference to house building, because that was very fully discussed yesterday, but I do not think that anyone will deny that the outlook for house building is, if anything, considerably worse than that for industrial building in terms of the amount of employment created and of work done.
Let us look at some other aspects of investment. The machine tool industry would, I think, be accepted as a fair indicator of movements in investment. What is the position there? Orders have now been falling for machine tools for fourteen months in succession. In August, the orders placed were the lowest for three years. Orders for the home market are down in real terms by 13 per cent to 16 per cent. compared with last

year. Deliveries are now exceeding orders by about 20 per cent., and the amount of orders on the books are about eleven months compared with fifteen months last year. I do not think that is a very encouraging picture of expansion.
Take the question of steel production. There was a very interesting article this week in the Economist about prospects for the steel industry. I will quote only one paragraph from what is a highly technical article, but which I think sets out fairly the conclusions. It says:
For 1958, the industry will probably have capacity to produce 23½ million ingot tons; but it will begin the year operating below capacity, and with fears that demand over the year may fall about a million tons short of that practicable figure. These are guesses, based partly upon the state of the industry's order book; partly upon the fact that any running down of consumers' and merchants' stocks, which now amount to about four months' consumption, could easily bring about a real slump in orders; and partly upon a reading of general economic prospects in Britain and in world trade.
It is always easy to sneer at those who believe that the outlook is not entirely favourable. I do not in the least object to right hon. and hon. Members opposite criticising me for forecasting what I described as a minor slump, but I do honestly believe, on the basis of such expert advice as is available, that there is—to use my own words—a real prospect of a minor trade recession. If we take the home market that is in a sense even more evident than if one looks at America. I make no observations about the American scene; I would agree with hon. Members that it is difficult to sum it up. I certainly believe that the situation could change very substantially if American monetary policy were to be altered. For the moment, I am concentrating on the prospect in the home market and I think it is as I have described it.
If there are still doubts in the minds of hon. Members, and if they have the idea that I am suggesting such a thing just because I happen to be a member of the Labour Party, I would remind them that a very well-known Conservative, who is also an economist, Mr. Roy Harrod, takes this view very strongly. Instead of the cuts in public investment which the Government are putting forward he has pressed that there should be an increase of £300 million a year in public investment at the present time because he fears


—heaven knows, he has no axe to grind—that in this matter there will be a decline in private investment which has to be offset in this way.
One may well ask, in those circumstances, what is the case of the Government for this sharp increase in deflation? I suppose the answer will be, "It is all very well for you to talk, but look at the exchange crisis which happened in September. What else could we do when faced with that situation?" I say to the Chancellor, in reply, "What exactly had the exchange crisis to do with the production situation here? Why should reducing production here help that particular type of exchange crisis?" Let us take some of the Government's own explanations. The Chancellor of the Exchequer said last week:
Some people say all this is due to speculation.
It was not "some people" who said that; it was the Chancellor himself who said it. It was he who said it in no less a place than the International Monetary Fund meeting. He said:
Our difficulties in recent weeks have been due not to lack of competitive ability as a trader, but to speculation.
The right hon. Gentleman really cannot object if some of us take him at his word and accept the fact that that is what is wrong.
Let me pursue this idea of our competitive position as a trader. Had the crisis been due to over-trading, had the balance of payments been in serious deficit as it was in 1955, as it was in 1951—because of the great rise in import prices—then, of course, action would have been necessary to reduce the volume of imports.
I am not going to argue now about the relative advantages of doing that one way or the other But the fact is that today the balance of payments is in surplus. The Chancellor is always telling us that there was a surplus of more than £200 million in 1956–57. Now we have the effect of falling import prices; they have fallen quite substantially in the last few months and in the coming months that will give us a very lucky bonus on our balance of payments. In fact, it has been estimated that we shall be saving about £200 million a year on the fall that has already occurred.
If we add that in, I do not think anyone can really say that there is any immediate

fear about balance of payments, although I would readily admit that the fail in commodity prices is only too likely to create difficulties in the sterling area. All the same, I must ask this question because we must try to find what it is the Government are attempting to do. Is the policy of deflation, restriction, cutting back of investment, and tightening up the money supply aimed at achieving a still larger balance of payments surplus?
On occasion, the Chancellor has said things which suggest that that is his desire and I can understand it as a desire. I have no intention on going back on things which have been said many times from this side of the House, to the effect that we need a balance of payments of at least £300 million a year. Is he suggesting that we need another effort at redeploying labour to plan for an even larger surplus?
If the Chancellor is relying on that, the redeployment of labour in the last two years has not been exactly encouraging. About 150,000 men were released either through a reduction in the Services or for other reasons and about half have become unemployed while the rest have become employed only in the professions and distributive trades. There is no sign from the available labour figures of any effective redeployment of labour to boost exports and keep down home demands. If the Chancellor is saying that we must aim at a still larger surplus so as to sustain the whole sterling area and that we cannot do that unless we have a surplus of £300 or £400 million a year, does he really believe that in present circumstances there is much chance of expanding exports by cutting down home demand?
I should have thought that this was about the most difficult moment to try that operation that one could imagine, because here we have another factor which we cannot ignore. That is the fall in commodity prices. Advantageous as it is to our import bill, and much as it helps our balance of payments from that angle, it will certainly make it more difficult for us to expand our exports. Indeed, we shall be lucky, in the coming months, if this fall in prices does not lead to a decline in exports from this country.
I pass on, leaving on one side that question, to the other reason for the crisis in September—speculation. It was speculation and it is not good enough for


the Chancellor to say, "Ah well, it is not only that they wanted to get into marks; they wanted to get out of sterling." In any case, if there was an expectation that the mark was going up in value, of course traders and financiers would get out of sterling into marks, because it would be profitable to do so. One could argue that because there was a switch at that time that there was not necessarily a great lack of confidence in sterling itself.
The second point is this. Another development had been taking place. Over the years, and particularly in the last eighteen months, exchange control has been substantially relaxed and, as has been pointed out on several occasions, British holders of capital have been allowed to export that capital through what has become known as the Kuwait gap. I ask the Minister, who is to reply, if he will reply to something which the Chancellor has not answered. It is: how much money was lost through the Kuwait gap? Is it the case, as the financial Press says, that between £80 million and £90 million of British capital exports took place through this loophole in exchange control?
The fact is that, if we relax exchange control in this way, we are bound to get this sort of thing happening, and this is one of the major reasons, I submit, for the crisis in September. There were others as well. I would not deny that the sterling area position presents difficulties. There was a withdrawal of sterling balances and there has certainly been a withdrawal of sterling balances which itself has been made possible to some extent by the uncontrolled export of capital to the sterling area. We lend to people the money and then they exchange it for dollars. That is not a very happy way of conducting our affairs. I admit, too, that the world dollar situation has probably placed an additional strain on our exchange, because when other countries become short of dollars they can obtain them and finance their purchases of dollar commodities through London. All this is the result of a series of relaxations introduced by the Conservative Government.
The basic difficulty about our position is that we are trying to run a world banking business, with freedom to customers to deposit and withdraw whenever they like, with excessive short-term liabilities

and wholly inadequate reserves. This is the truth of the matter. The real fault of the Government in this field has been their complete failure to build up reserves while simultaneously relaxing controls and loosening up relations within the sterling area.
Suppose the Government go ahead with their policy; suppose they do depress production and investment; suppose they succeed in keeping down wages. Will this prevent another exchange crisis if the sterling area is in deficit to the dollar area? Will this prevent another exchange crisis if members of the sterling area start drawing down their balances rapidly and if the balances are being swollen by uncontrolled lending from here? It seems to us on this side of the House a really ridiculous situation that we should be cutting investment here, controlling it quite rigorously in some fields, while leaving it completely free so far as the export of capital to the sterling area is concerned.
Does the Minister think, if this were to happen—and heaven knows it is not a fantasy; we know that it is quite liable to happen as the result of the fall in commodity prices—that speculators are going to hold off selling pounds because of the Government's policy here? I say that, whatever the merits of the policy, it is certainly quite inadequate for dealing with the exchange situation.
I repeat what my right hon. Friend the Member for Huyton (Mr. H. Wilson) proposed in his speech. We consider that the time has come to reconsider the whole of the exchange situation and to reimpose some of the controls that have been taken off. We think that the time has come when we should have a proper and serious conference with the sterling area, looking ahead and trying to plan as far as possible, to avoid this crisis. We also think, and say, that the Chancellor should have gone very much further than he did at the meeting of the International Monetary Fund in asking for additional international credit to deal with capital movements. His brief reference to it he merely remarked that there was some kind of problem here—was totally inadequate. I cannot see for the life of me why he did not make a firm and urgent demand to have this matter considered.
Finally, the argument of the Government is, of course, that they had to do


this because they had to stop the wage-price spiral. They have discovered a new formula. The emphasis now is on "not providing money to finance the spiral of costs." This is a wonderful new idea, but it is interesting to reflect that all the time the Lord Privy Seal was Chancellor—in those four years when he was sitting in the Treasury—it never occurred to him that this was the way to deal with inflation. He did, it is true, think up the Bank Rate. He was the person who reactivated the Bank Rate, so to speak; but apparently he did not think that the way to deal with the situation was not to finance the spiral of costs.
The Prime Minister, when he was Chancellor, had one bright idea—Premium Bonds. But it does not seem to have occurred to him that this was a solution, that this was the "gimmick" which would do the trick. It was left to the present Chancellor suddenly to discover this thing out of the wealth of his economic knowledge. Now, apparently, we know what to do. We did not know what to do between 1951 and 1955 when the right hon. Gentleman the Lord Privy Seal was there; we did not know what to do when the Prime Minister was Chancellor, but now we do—we have got the answer. I shall have some comments to make on the significance and efficacy of this new gadget in a moment or two, but there is another point which I want to make first.
Does the right hon. Gentleman not think it wiser, before trying a new cure, to diagnose what exactly is wrong? This brings me to the astonishing remark of the Chancellor that he was not concerned to judge between those who call this a demand inflation and those who call it a cost inflation. I do not wish to enter into a very technical discussion, but I am bound to say that I would have thought that an admission of indifference to those two things was quite extraordinary in a person responsible for the economic and financial policy of the country.
Of course, there is a great problem here. This is the major economic problem of the post-war years. I venture to say to the Chancellor what I think the difference is and why I think it is significant. I think that there is a demand inflation when we have such an

excessive demand that the negotiated rate of wages follows the actual rate of wages paid in industry. When there is such a shortage of goods and such a demand for labour that employers compete against each other, and it does not matter much what the unions do, wages go up and then the collective bargaining rates follow.
That implies that there is no slack in the economy at all. It is a picture of a demand inflation. I say, first, nevertheless, that this was not true of most of the post-war period. I would certainly say that it is not true today. There is, indeed, no need for the Chancellor of the Exchequer to be quite as apologetic from this angle as he appears to be. During most of the post-war period we have not been suffering from this excessive demand inflation. We have been suffering from a cost inflation, and by that I mean that costs go up and are followed by higher prices even when no excess demand exists.
Let me admit at once that we suffered from this between 1946 to 1951, and the major cause of it, the major initiative, in those years came from rising import prices. They were, as I think all will admit, beyond our control. They were world prices which were rising very fast. We tried to hold back internal prices as much as we could, and not without success. Although import prices doubled during these years, the cost of living went up by about one-third. But in the following six years, 1951 to 1957, the stimulus to the rise in costs was direct Government action to raise prices, which encouraged the wage-price spiral still further, and this was also helped by the relatively small increase in productivity during these years.
When the Government cut subsidies and drive up prices they naturally initiate a demand for a corresponding rise in wages. When they push up rents they do the same thing. This has been the policy of the Government over these years, and, of course, it is not merely that you get a rise in wages to balance the increase in prices, but the rise in wages itself puts up prices still further. What the Government were doing was spinning that spiral still faster, when any sensible Government would have put the brake on it.
This begins to put the problem we face in perspective. The wage-price spiral is not a kind of original sin on the part of trade


unionists. If the Government had not acted to drive up prices during those years, it is extremely doubtful whether we should even be bothering to have this debate today, because in my view we should not have had a cost inflation at all.
I fear that the Government are now going to make matters considerably worse, and I will say why. The significant thing is, of course, not the actual movement of wages, but the movement of labour costs, and labour costs depend on wages in relation to the rise or fall in productivity. The record shows that quite clearly since 1948. For about two years, 1948–1950, there was a very slight rise in labour costs only, because although wages were going up productivity was rising faster. There was then a bad patch. There were higher wages and in 1952 an actual fall in productivity. Then came a better period in 1953 resulting from the recovery and expansion of production.
Then there was another particularly bad period in 1956 when, again, production was being clamped down but wages continued to rise and so labour costs went up. At the moment, as my hon. Friend the Member for Wrexham (Mr. Idwal Jones) pointed out, it is quite likely, as has been stated by one of the Bank Reviews, that labour costs are falling because production has been rising, but if the Government carry on with their existing policies I am afraid it is almost inevitable that the position will be reversed and labour costs will rise again. Of course, we can carry the process so far, we can squeeze production down so far, that unemployment stops any wage rises at all, but I understand from the Prime Minister that that is not the Government's idea. What they want to do is to damp things off, but, nevertheless, still avoid unemployment.
That brings me to the gadget—the supply of money as the instrument of control. If the Chancellor had said, "We are tightening bank credit. We think that it has got a bit slack and, therefore, we shall make another appeal or give another instruction to the banks about bank advances," it would not have been very novel, but at least it would have made a little sense. But to speak as though we shall stop the spiral specifically by cutting off the supply of money is at best an extraordinarily stupid and clumsy idea.
Is the Chancellor's notion that bank managers should apply this doctrine to individual firms and industries? He has told the banks that they must not expand advances at all, but they have to give their managers some instruction. Is the idea that the bank manager says to the firm when it approaches him, "Have you increased wages?" Is that the idea? Or are bank managers supposed to go further and to say, "Have you increased productivity, because if you have increased productivity you can have the advance"?
It is a ridiculous picture. I am glad to see the Chancellor nodding in agreement. But if that is the case, let us see what this means. What is the significance of all this talk about not financing wage increases? If it is not to work through bank managers, as it is supposed to work through the Government and the Transport Commission, there will be one rule for the public enterprises and another rule for the private enterprises.
A good deal has been said already about the velocity of circulation. The Chancellor of the Exchequer dismissed all that by saying that there was always a technical solution to a technical problem. It would be very interesting to know whether he knows what is the technical solution—indeed, whether he knows what is the technical problem. It is not quite as simple as that. It is not so easy to stop an increase in the velocity of circulation. It is very commonly the case that if the supply of money is reduced people use their money more actively and, correspondingly, the velocity goes up and one does not have the effect which one wants to have.
Here is another complication. Commodity prices are falling. It is quite likely, in those circumstances, that, in fact, there will be less demand for bank credit. It may be that stocks are falling, as well, in consequence of this. If there is less demand for bank credit on that account, how does the control work? How does it stop the wage-price spiral?
But I think that the more serious danger is this, which I put to the Chancellor. We all want an increase in productivity. Does he say that this must take place in the face of a rigid freeze of bank credit and bank advances? I think it is a very dangerous position to adopt, if I may say so to him, because the logic of


his argument is that, despite the fact that there is an increase in output through higher productivity, nevertheless prices have not merely to be stable but they have actually to fall. Is that what he wants? What he was saying the other day suggested it. I am bound to say that I think the only effect of that kind of policy is to stop the rise in productivity altogether.
I would end these remarks by quoting again what Mr. Harrod has to say about it. He is a friend of the Chancellor and I hope that the Chancellor will take him seriously:
It does not seem to be appreciated that the holding down of the quantity of money for so long a period"—
the last five years—
is highly unusual and artificial. Its main effect is to make Government borrowing extremely expensive—at the cost of the taxpayer. Under the gold standard, when these things were supposed to work as they should, one has to go back to 1878–82 to find a five-year period when the quantity of money was not increased, And those years figure in economic history text-book, as 'The Great Depression'.
I think that the Chancellor should take that to heart and perhaps be a little less free with his formula and his gadget than he has been in recent weeks.
More serious than this muddled thinking about the relationship of credit to wages however, is the Government's handling of specific wage issues. I must briefly return again, first, to the question of the Health Service employees. My right hon. Friend will have more to say about that this evening, but I want to put these points to the Prime Minister and the Chancellor. I am sure that we all regret the employees' decision, announced this morning, that they will not indulge in any overtime. It could have serious consequences for all of us. But I am bound to say that they have been put in an almost impossible situation. The procedural situation needs clearing up. The employees cannot go to arbitration, because there was no dispute on the Whitley Council. What happens now'? Is the issue to remain there? Have they no alternative at all? What are the future arrangements to be?
When the Government do something unprecedented like this, turn down a recommendation of the Whitley Council,

I should have thought that, in effect, they were really casting aside the present machinery of negotiation, because it is no good the employees negotiating except with the employer—the man who decides whether to pay or not. Since the Government have taken away the right of the management side of the. Whitley Council to decide, is it not now necessary to think afresh about the whole constitution of the Council? I suggest to the Prime Minister that he be not too stickly on this, not too insistent on saving faces. It really is very desirable to get out of this situation, and there are various alternatives. One is to invite the staff side to bring up the matter again, and then to instruct, I suppose—absurd as it may seem—the management side to refuse. The matter can then go to arbitration.
But there lies behind this a second point, a point of substance, and it is more important. The Government's decision suggests that they are not prepared to consider wage applications on their merits, and that even if the case, as I believe is the truth in this instance, is very strongly based on the cost of living and relates to low-paid workers—I know myself of some in my own constituency with no more £7 than a week—nevertheless the rigid rule is, "You must not give way."
The second case is that of the Transport Commission, and to it I shall refer only briefly. We still do not know whether the adjective of the Minister of Labour, that the Government would not finance an "inflationary" increase means anything or not. I gathered from the Prime Minister that it meant jolly little and that, in fact, whatever the justification, whatever the explanation of any increase that might be awarded by an arbitration tribunal, the Government did not intend to do anything about it.
Let us consider what is implied. The Minister of Transport himself has said that it is extremely unlikely that there is any way out by way of higher wages; that would not help; it would lead to reduced traffic. The Government are, therefore, saying to the Commission, "If you get an arbitration award against you, you must cut down on investment." Does that make sense? Here is a railway investment programme which was designed to get us away from the present situation, and so to increase productivity, services and the rest as to enable the Transport


Commission to pay reasonable wages Now we have the dilemma that if the Commission does pay even the minimum considered necessary it has to cut investment.
One last remark on this. It is not very long since an inquiry on the railway wages situation produced a rather famous Report. The House will recall these words:
The nation has provided by statute that there shall be a nationalised system of railway transport which must be regarded as a public utility of the first importance. Having willed the end, the nation must will the means. This implies that employees of such a national service should receive a fair and adequate wage, and that, in broad terms, the railwaymen should be in no worse case than their colleagues in a comparable industry.
That Report was accepted by the Government. Do they still stand by it? We need an answer—and the railwaymen certainly need an answer.
We believe that if the Government persist in these policies which combine crude deflation and dictatorial instructions to industry they will inflict needless loss and damage on our economy. We believe that this can still be avoided, but only by a repudiation of some of the things that have been said—and some of the things that have been done—in these last few weeks.
I have already explained what I think should be done internationally. I want to emphasise that the solution to our problem at home is, in present circumstances, high investment and high production. If this involves any risk of going too far then, instead of damping down activity generally, there is an overwhelming case for specific controls, of which building licensing is an obvious instance. But I am not saying that even that is necessary, in view of the figures I gave earlier.
Secondly, I would say that to handle the so-called wage-price spiral the first thing that the Government must learn is not to aggravate it, as they have aggravated it all these years. Here, I must mention something that they have done very recently which must do just that. To finance a pensions increase entirely out of contributions, to make arrangements that actually yield the Treasury a profit is not only socially unjust but, in present circumstances, is extremely silly as well.
This action is all the more intolerable after the last Budget of the right hon.

Gentleman, when he gave substantial reliefs in direct taxation. He really cannot be surprised, first, if prices go up as a result of this, because the employers will pass on the cost of their contribution, and although I am not making prophecies—and I hope that I will not be accused of encouraging anybody to do anything [HON. MEMBERS: "Oh."] Hon. Members should know better than that—the plain fact is that if contributions are put up by nearly "two bob" a week a lot of workers will ask, "Where is the money to come from?" They will say that because the Exchequer is not carrying any part of this new burden.
On the general issue of wages, the Government are perfectly entitled, of course, to express their views, but they must not give the impression, as they have done, that when workers, trade unionists, come to arbitration, the dice are loaded against them. The claims must be dealt with on their merits. Finally, if they want agreement on restraint—and there are some signs that, at last, they are beginning to see the need for it—it must be agreement, not dictation; it must be agreement covering all incomes, and not wages only; it must cover dividends and it must cover profits, and it must involve an effort by the Government, on their side, to play their full part in keeping prices down.
I say to the Government that that is the course that they should follow. If it means abandoning doctrines which are dear to the Chancellor's heart, if it means abandoning doctrines of laissez-faire which they have drifted into year by year, let them, for once in a while, put country before party.

4.28 p.m.

The Paymaster-General (Mr. Reginald Maudling): The right hon. Gentleman the Leader of the Opposition began his speech by referring to the speakers who are to take part in this debate from this Front Bench. As I believe is traditional on the last day of the debate on the Address, it will be wound up by my right hon. Friend the Leader of the House. I cannot myself claim to be a Treasury Minister in the sense to which the right hon. Gentleman referred, though I can inform him that when one becomes Paymaster-General the first thing one receives is a Minute from the Treasury saying, in effect: "It must be clearly


understood that the business of your office is run by the Treasury, and you had better keep out of it."
This Amendment is quite clearly designed as a Motion of censure on the Government's economic policies. I will treat it as such, and try to follow in detail, and, if I can, in sequence, the arguments advanced by the right hon. Gentleman, which were, as is usual with him, weighty ones.
Perhaps I may first just refer to one or two things he said about my right hon. Friends. He referred to my right hon. Friend the Chancellor and talked of errors of judgment—and "lack of candour" was a phrase he used when comparing the situation of the spring and summer with the crisis of this autumn. I do not remember that at the time of the Budget this year the right hon. Gentleman was very forward in suggesting further measures of deflation. In fact, all the proposals coming from that side were pressing on for inflation. I must remind him—because he referred to my right hon. Friend and talked of a lack of candour—that before the crisis of 1951 when he was Chancellor, although I have searched the records, I have found no record of any publicly announced policy to deal with the impending balance of payments crisis other than a small reduction in imports of dollar cheese.
Moreover, the right hon. Gentleman referred to my right hon. Friend the Home Secretary and asked why it was that he never thought of the idea of using the volume of money as a way of dealing with the spiral of costs in a balance of payments crisis. In the winter of 1951–52 my right hon. Friend used precisely the methods of the Bank Rate and the methods of a very large funding operation to deal with the crisis left behind by the right hon. Gentleman himself.
I want to turn to the arguments put forward by the right hon. Gentleman on the general economic policy of the Government. First, may I start by restating our objectives, because the right hon. Gentleman talked in terms, as he said himself, of diagnoses and remedies and he challenged us on both these points. What are our objectives? They are twofold—first, to resist a speculative attack on the £, and that is a phrase used commonly on both sides, and in resisting that

attack my right hon. Friend has already had considerable success; and our second and simultaneous objective is to call a halt to the steady and almost automatic decline in the value of the £ which has been taking place for many years under succeeding Governments.
These two things are linked because the strength of sterling abroad is linked to the strength of sterling at home. The external value of the £ is based entirely on its internal value. I do not think there is any quarrel about this, because I see that the right hon. Gentleman himself on 25th July this year said:
If those who own the sterling balances begin to feel that the value of the is going to fall continually, we may be quite sure that they will wish to withdraw their money."—[OFFICIAL REPORT, 25th July, 1957; Vol. 574, c. 712.]
In other words, there was a direct link, although he appeared to be denying it, between any capital movement against sterling and the prospects for the internal purchasing power of the money. Therefore, I do not think there can be any quarrel about our objectives here, which are to stabilise the value of the £ for internal and external reasons alike.
The argument from the Opposition must be that our methods are wrong—which has been explained in some detail by the right hon. Gentleman—and that the methods of the party opposite would be better. I did not hear much explanation of what their methods would be or why they would be better.
What I should like to do would be to examine both those propositions. First, may I make an analysis of the present problem, following what the right hon. Gentleman said. We have a dual source of external difficulties. First, in our position as traders, we may lose our competitive position if costs rise; and secondly, in our position as bankers, money may be drawn out of this country in the form of capital movements, although we may have a strong balance of payments situation.
The right hon. Gentleman said that we have at the moment a substantial current account surplus, yet we have had a balance of payments problem of considerable size, largely because of capital movements. This, as he pointed out, stems largely from our position as bankers for the sterling area. There are arguments that can be advanced, and often are canvassed, about the relevant advantages and disadvantages of our


position as bankers to the sterling area, and as the country whose currency is used so widely throughout world trade. There are immense advantages that investment income brings to us, such as access to cheap raw materials. On the other hand, there are distinct disadvantages. We have to carry the stress of the sterling area's dollar requirements, and, indeed, in a world where dollars and hard currencies are getting scarcer, as they are at the moment and have been for some time, the United Kingdom currency has to carry the burden of almost the whole world's shortage of dollars.
One may discuss as an academic exercise whether this a good position to be in. The fact is that we are in it and cannot get out of it even if we wished to do so, for two overwhelming reasons; first, because the sterling area system is now a central part of the whole cement of the Commonwealth, and secondly, because the sterling balances represent moneys invested in the United Kingdom economy and which cannot be withdrawn from that economy without disastrous consequences. Therefore, we are in a position where we must face the sterling area problem, accept its advantages and try to deal with its difficulties.
I would suggest that what the right hon. Gentleman said about the sterling area was of very great significance indeed. He was talking about the Kuwait gap. I understood him to say that the reason why money could flow from this country out of the sterling area through Kuwait was because of some change in the exchange control regulations which we had introduced. I do not think he will find that is so. It has always been possible for sterling to move freely within the sterling area, throughout the sterling area, and there have never been controls upon such movement.
The right hon. Gentleman was suggesting that. He was suggesting that there should for the first time be introduced exchange controls to control capital movements within the sterling area. There may be a case for that, but that is a very big suggestion indeed, and the right hon. Gentleman should ponder both the possible advantages and the very great possible disadvantages of a measure which might undermine the whole strength of the sterling area with all that

it means to us. It is because these capital movements and current trade movements interlock to some extent that, for both reasons, we must do all we can to maintain the internal value of our currency.
There was talk of foreign exchange control. One cannot protect an international currency like sterling by wrapping it up in the cotton wool of exchange controls. One cannot force people outside this country to hold sterling if they do not want to. They will only hold sterling if they think it is worth holding. If they are asked to hold sterling they will think of its future value and, quite rightly, its future value relative to other currencies. But in assessing the value of sterling they will look at Government policies and they will assess to what extent they believe the Government intend fully to carry out their declared policy, despite the criticisms and difficulties involved. There will also—and I should mention this fact, because it is of importance—be the effect upon foreign holders of sterling, particularly as an election advances—of policy declarations by a possible alternative Government.
I do not wish to question in any way—I know him far too well—the sincerity of the right hon. Gentleman for saying that he will always do all he can to maintain the strength of sterling, but I would say to him that foreign holders of sterling will look behind what he says to the policies of his party, and, in so far as those policies are or appear to be of an inflationary character, it must reflect upon the judgment of foreign holders of sterling. That is a point which is fair to make and a very true point in present circumstances.
I believe the main lesson that we have learned in our economy since 1945 is that we cannot run this economy flat out all the time. If we try to run the whole machine flat out all the time it will overrun and we shall get into trouble. This has been apparent ever since the right hon. Member for Bishop Auckland (Mr. Dalton) used his famous phrase about "lubricating the economy with a sufficiency of purchasing power." Unfortunately, the result of the lubrication was all that followed in 1947 and in 1949.

Mr. Hugh Dalton: It prevented a repetition of the shocking incidents immediately following the First World War when, through lack of purchasing power, there was mass unemployment. We did not have that.

Mr. Maudling: That is precisely my point. We need to have an adequate volume of purchasing power to maintain full activity, but we must not go so far as to have inflation and a balance of payments crisis. The problem for any Government in this country, of whatever party, is how to maintain adequate demand, to sustain full employment and full activity, without going too far and having a balance of payments crisis which, with our inadequate reserves, we cannot afford to face.
Time and again—in 1947, 1949 and 1951—the economic machine was allowed to run too quickly and had to be checked by succeeding Governments, who in each case had to restrain the volume of home demand. That is what we are doing at the present moment. We are trying to restrain the volume of home demand to prevent it over-running and thereby creating intolerable difficulties for our currency on external account.
The right hon. Gentleman somewhat chided my right hon. Friend the Chancellor of the Exchequer for not knowing the difference between what is often called, in the revolting terms of some economists, a demand-pull or a cost-push inflation. I think it was his right hon. Friend the Member for Huyton (Mr. H. Wilson) who said that the other day. I suggest to the right hon. Gentleman that economics is not yet such a precise science as all that. It is all very well to say that we cannot cure the disease until the cause is diagnosed, but if we assume a greater degree of accuracy in the diagnosis than is justified we might very well be treating the wrong disease. Therefore, it is not wise to say that this is one kind of inflation and that is another kind.
I suggest to the right hon. Gentleman that the two are interlinked, because a cost inflation has to be fed and sustained by adequate demand, and, equally, an excess of demand, as we have seen, will stimulate a cost inflation. I do not believe it is possible to distinguish between them and to divide the one from the other.
So our policies are twofold; first, to restrain demand by operating on the total level of purchasing power, and secondly, to seek effective restraint of personal incomes, and thereby operating both on a demand inflation and a cost inflation simultaneously.
To take the first point first, methods of restraining demand, here we have, in the increased Bank Rate, the limitation of public capital outlay, in the limitation of bank advances and new directives to the Capital Issues Committee, a single unified programme designed to restrain the total effective demand in the economy. What is the alternative? The right hon. Gentleman himself said that the increase in the Bank Rate was effective as a temporary measure to meet a balance of payments crisis, but no one has ever suggested that a 7 per cent. Bank Rate is here for ever.
I think it is fair to say that the cost of capital, like the cost of anything else, is influenced by supply and demand, and we cannot really expect an era of very low long-term interest rates in circumstances in which the world is short of savings, and there is a growing demand for capital throughout the world. That does not make sense. Investment is not to be cut, but held back at its present level. I think the right hon. Gentleman said something about the level of investment. May I remind him that in his Budget in 1951 one of his major proposals was for abolishing initial allowances in order to reduce the level of investment. [Interruption.] Exactly, he did it deliberately. I thought the right hon. Gentleman would raise it. He deliberately planned to reduce the level of civil investment, as he said at the time, to make room for defence and exports. But we have at this moment a level of defence expenditure 32 per cent. above then, a level of exports 27 per cent. above then, and we are not cutting but maintaining a level of investment 70 per cent. above then.
If investment is not to be restrained, if the right hon. Gentleman is against all these cuts in investment, how will he restrain demand? Will he cut consumption, because that is the only alternative? If he will, what forms of consumption and where? Do not let us talk as if the matter concerned only a few garages, cinemas and petrol pumps, because they are trivial and do not have any real relation to the size of the problem whatever.
The right hon. Gentleman reverted again, as in the past, to the question of production, which is of immense importance, and I want to answer the serious argument which he put forward. Indeed,


I think he helped me, because only in July he asked this question:
Do the Government want production increased? Do they regard an increase in production as a solution?
He went on to say:
For what it is worth, I do not think that increased production is necessarily the cure for inflation. If it is due to increased productivity it helps enormously, of course. But if it is simply due to the re-expansion of industry after a period of stagnation, it is then certainly not a cure for inflation, unless, first, we have no trouble about our balance of payments, and we do not get what the Chancellor has warned us about, namely, a situation where, as production expands, imports rise and exports do not rise correspondingly, so that we are back again with a balance of payments crisis."—[OFFICIAL REPORT, 25th July, 1957; Vol. 574, c. 715–6.]
That is exactly the point. Experience has shown that we cannot run this economy flat out the whole time without running into balance of payments difficulties. Therefore, it was possible, as succeeding Governments found, in 1949 and 1951, to take measures to restrict the pace of our advance in order to make that advance more sure and certain.
Experience has shown that, when we allow the economy to expand again, it happens that the rate of expansion of the level of incomes goes ahead of the rate of expansion of production, and we find ourselves back in trouble and faced with inflation and a balance of payments crisis. Therefore, it seems to us that in this connection, it is extremely important to find effective methods of insuring restraint of personal incomes if we are to help the problem of expanding production and avoid a return to a balance of payments crisis.
In talking of restraint, we are talking of all forms of personal income. It is perfectly true that attention normally tends to be fixed on wages, and there are two good reasons for that. First, the volume of demand involved in the case of wages is very much bigger than that involved in the case of dividends, and, secondly, rising wages always mean, as a consequence, rising profits and rising dividends. That is why attention tends to be focused on wages, but clearly the principles which apply to one form of income must in fairness apply to the others.
There are some things which we are not proposing that it has been suggested we are. We are not proposing to apply a wage freeze. Such a thing, I think, would be wrong in principle and impossible in practice, as experience has shown. We are not suggesting a Government-imposed wages policy, a phrase often used, but not so often fully understood, nor do right hon. Gentlemen opposite support such a suggestion. Nor do we propose to interfere with the established processes of arbitration.

Sir Frederick Messer: The Whitley Councils.

Mr. Maudling: The position is that the Whitley Council in the development of the National Health Service wages position was not an arbitration, as my right hon. Friend explained. It is important to bear that distinction in mind. It was made quite clear by my right hon. Friend. I repeat what I said—that the Government have no intention of interfering with the established processes of arbitration. I think I can explain the position and our attitude in the matter by reminding the House of what the right hon. Gentleman opposite himself said. In his speech as Chancellor of the Exchequer to the T.U.C. in 1951, he said this:
If incomes go up more than production goes up, then prices will rise. The truth is as simple as that. I would like to see it hanging as a text on the wall of every office inhabited by any employee or trade unionist concerned with negotiations about any increase in income.

Mr. Gaitskell: I am much obliged to the right hon. Gentleman for quoting from that speech. I stand by everything I said then, and I do not think that anything I said this afternoon is in conflict with it. I would ask the right hon. Gentleman, however, whether he is also proposing to adopt certain other measures which I proposed at that time, such as statutory control of dividends, and an offer to increase food subsidies in return for an agreement on wage stabilisation?

Mr. Maudling: I am certainly not advocating statutory control of dividends. I simply said that the principles which apply to one form of income should apply to another. I do not think he would propose the statutory control of wages. I am not quarrelling in any way with what the right hon. Gentleman said. I was quoting the right hon. Gentleman to show


that, in this matter, the principles on which we are operating are those which commend themselves to the other side, and which would undoubtedly do the most good to this country's economy.
Not only is that true, as the right hon. Gentleman has said, but it goes further than that, as my right hon. Friend the Chancellor showed recently. If all production increases are absorbed by wage increases, it means that there is nothing left for the salary earner, the pensioner, the social services or the expansion of capital. In this field of wages itself, there is this difficulty—that some industries can increase their productivity by their very nature, much more quickly than the others. In transport, there is, I am sure, room for a good deal of economy and re-organisation, but we cannot expect a bus driver to double his productivity by driving twice as fast. Therefore, in wages, we cannot get a rough fairness between man and man if the total increase in productivity in the industries which can go at full steam ahead is absorbed by the people in those industries, leaving nothing for the others. These are weighty and difficult problems. On the face of it, they look like arguments for a wages policy, but I think that that would be entirely wrong.
What we are saying is that the principles I have been trying to state, which I believe to be in accordance with the principles the right hon. Gentleman set up on this wages point, should be observed by all who are concerned with wage and salary negotiations, with arbitration, or with dividend distribution. In all these matters, these principles should be borne in mind because they are a basis for fair play between one section of the community and another. That is the attitude of the Government, and I think that it should command fairly general agreement.
In the light of this policy, the Government must consider what they are going to do, first, as employers and, secondly, as controllers, in effect, of the volume of money, a subject to which I shall return in a minute or two. As employers, as my right hon. Friend the Minister of Labour said, we have said that we shall apply in our dealings with our own employees the principles which should be employed by other employers. For ourselves, we say that—no more and no less.

We go on to say that, if increases in cost arise from increases in wages, then we shall have to find countervailing economies elsewhere within the total of government expenditure.
As controllers of the volume of money, we have, first of all, a direct responsibility in the case of the railways, and secondly, an indirect but equally effective responsibility in the case of industry generally. In the case of the railways, to which reference was made by the right hon. Gentleman, my right hon. Friends have made it perfectly clear that what we have said is that we cannot increase the amount of money flowing from the taxpayer to meet the railways' operating deficit. In so far as, in accordance with negotiations or arbitration decisions, they find themselves paying more wages, they will have to find that cost somewhere within their own resources. That is, I think, a quite fair statement of principle.
As regards industry generally, to which the right hon. Gentleman referred, he put forward some rather strange idea about bank managers asking people about their productivity—he knows that is nonsense; he knows about these things just as well as others do. He brought up the question of velocity of circulation, on which we could, no doubt, hold a long and erudite debate. I do not think he was right in attacking my right hon. Friend again on this point, because, surely, the argument is this, that the total amount of demand in any year is represented by the amount people earn plus the amount they borrow plus the amount they draw from their savings.
Whatever happens about the velocity of circulation, that is the total effective demand, and the Government's policy is to control the total effective demand, controlling it to this extent, that, when we say we do not intend to finance an inflation, we do not propose to perpetuate a system whereby the level of money demand always expands enough to allow higher wages and higher profits to be automatically passed on in higher prices. That is, I think, a simple statement of what we mean by financing inflation. That is our policy. We think it is the right one, and we intend to stick by it.

Mr. Frank Bowles: There are two questions here, balance of payments and inflation. I should be glad if


the right hon. Gentleman would keep them apart. We encourage foreigners to come to this country, particularly Amen-cans, who spend a great deal of money, and therefore, I should think, increase prices. They certainly doubled the prices in Portugal, to my knowledge. In putting this question, I have in mind the inquiry about the new hotel where some Americans are supposed to be likely to spend nearly £75 a day. Supposing one hundred thousand come in and spend that sort of money during their three weeks' visits, and other foreigners come, how much of that will be responsible, does the right hon. Gentleman think, for inflation in this country?

Mr. Maudling: It would be responsible for an increase in effective demand; it would be responsible also for an awful lot of dollars coming to the Treasury.

Mr. Bowles: The two should be kept separate.

Mr. Maudling: The hon. Gentleman asked me to separate the cost of living and the question of foreign exchange. It was precisely because the right hon. Gentleman the Member for Bishop Auckland did make that separation that he got into the trouble he did, because they are two things one cannot separate.

Mr. Gerald Nabarro: Would my right hon. Friend permit a question from this side, a more sensible one than the last, I hope? My right hon. Friend has said, in relation to the nationalised industries, that it is not the purpose or policy of Her Majesty's Government to underwrite inflation. He has related it particularly to the railways. What is the position in regard to the coal industry? What is the position if the National Coal Board grants a large increase in wages? Does my right hon. Friend propose then to underwrite that by authorising a further increase in the price of coal, having regard to the statutory obligation on the Board to pay its way taking year with year?

Mr. Maudling: I refer to the railways for two reasons; first, because the right hon. Gentleman the Leader of the Opposition did and I was trying to follow him; and, secondly, because of the special position of the railways vis-à-vis the Exchequer. But it would be quite wrong and contrary to all precedent to discuss what might be the effect of wage claims

which have not been formulated or put in, and I am, therefore, sticking to the railways.
I have been dealing so far with the Government's policy and defending it. I now want to turn for a little time to the alternatives which would have been offered by the right hon. Gentleman if he had troubled to tell us what his alternatives would have been. From a study of his recent speeches and those of the right hon. Member for Huyton, I gather that their suggestions fall into two parts: first of all, what we should get other people to do; and, secondly, what we might do ourselves. The first part is usually the more prominent.
The right hon. Gentleman proposes, for example, that there should be more international liquidity. The creditor countries would have to see about that. He proposes that we should study the problem of supporting world commodity prices. That is extremely important, but once again the main burden would have to fall on countries in a financial position to stand it. He proposes that there should be further and closer consultation with the Commonwealth. All these things depend upon the action of other people, and all these things, incidentally, are matters to which the Government have already paid close attention.
If the right hon. Gentleman would study what my right hon. Friend said at the International Monetary Fund Conference, he will find there an indication of how closely this point was dealt with at the international level. If he will study the communiqué from the Mont Tremblant Conference, he will there see exactly the attitude of the Commonwealth towards our common interest in maintaining the value of sterling. I do not, therefore, think that his suggestions add anything great to what is known already about our economic problems.
Another of his proposals is that we should have what is called a system of selective controls. I should like for a moment or two to analyse this proposal, because it is the only original proposal to come so far from the other side, and, therefore, it deserves close analysis.
What sort of controls do right hon. and hon. Gentlemen opposite mean, and how will these combat inflation? Do they mean import controls? No. The right


hon. Gentleman stated again that import controls are no cure for inflation. Do they mean foreign exchange controls? I have explained already that one cannot force foreigners to hold sterling; one can but persuade them that it is worth holding. Do they mean raw material or process controls, a system whereby businesses must obtain licences for raw materials in a time when raw materials are in very easy supply?
Do they mean a system of process controls, telling people what they should or should not manufacture? Can one say that some industries are essential and some inessential, as has been suggested? Can one say, for example, that the toilet preparations industry is inessential and should be controlled? If the idea is to maintain process controls, and one is to say to the toilet industry that it is inessential, what will happen to its export trade, which is important? Can one really say to the people who want to buy lipsticks or cosmetics that, although they want to buy them and they have the money, they must not buy them because we must control the people who want to make them? The alternative will be that the products will be imported, and that will fall even more heavily on our balance of payments.
Lastly, the right hon. Gentleman apparently wants investment controls. This seems to be the principal starter in this particular race, and we have heard a good deal about it from right hon. Gentlemen opposite. These controls can take three forms—financial controls, controls over plant and machinery, and controls over building. So far as financial controls are concerned, we have the Capital Issues Committee and we have the instructions, advice or guidance issued to the banks, to which the right hon. Gentleman himself referred. Do right hon. and hon. Gentlemen opposite propose to have controls over the acquisition of plant and machinery? That, I think, would be a complete innovation in peacetime, and I do not think that it is seriously proposed.
Is it to be building controls? What can be done by controlling building? Of the total volume of building in this country a very large amount is maintenance. One can hardly control that and say what is

to be maintained and what is not. The next really large chunk is factory building. Is it proposed to control inflation by telling people when to build factories or when not to build factories? Is it proposed to tell them when a factory is wasteful? Surely the best way of showing industrialists that certain factories are wasteful is to see that money cannot be got except for good propositions.
We are brought to the small section of miscellaneous building—about 7 per cent. or 8 per cent. of our total building expenditure. That includes hotels—which earn a lot of dollars—warehouses, shops and offices. They are hardly inessential. In fact, the only things that might be so regarded are some garages and cinemas—and I believe that for every cinema being built, if any are being built, more than one is falling into disuse. What building controls boil down to is a relatively small section of the economy. How can that be regarded as inflationary?

Sir Robert Boothby: I do not mind what the Leader of the Opposition said about import controls and inflation, but can my right hon. Friend tell me whether it is the considered view of the Government that we can afford to import dollar commodities in unlimited quantities, without having any regard to our balance of payments position with the United States? That is the one control that might have to be brought in.

Mr. Mourning: We do not do anything of the sort. The open general licence which covers the dollar area is for basic commodities, and the inessential commodities are still subject to a licensing system. These actions are not a cure for inflation. We cannot possibly cure inflation by stopping these things coming in, thus ensuring that there is an excess of demand over supply. If fewer things come in there is a smaller supply, and that makes inflation even worse.
Finally, we come to the possibility of price controls. It is quite true that it is inconsistent to say that price controls mean nothing and yet ask for restraint in passing on price increases. It is true that restraint in passing on costs in the form of price increases can be a great help in dealing with an inflationary spiral, as at the present time, but price controls as a permanent policy cannot deal with the


problem of inflation. If we control the price of an essential commodity below its true market price we merely increase the demand for it without increasing the supply. That means either rationing or importing more to meet the demand. If we control the price of essentials and the volume of money is the same, the price of inessentials rises further, as happened in 1949 and 1950. Labour then flows into the inessential industries, because the returns are greater and the prizes higher.
Neither type of action can be a solution for the problem of inflation. I suggest that this great new policy of selective controls is rather like the patent medicines that are sometimes sold by hucksters, in magnificent bottles with fine labels on the outside, but with very little analysis of the murky contents, and which are said to cure all ills so long as the patient survives.
I have endeavoured to follow the right hon. Gentleman. I think that I have covered most of the arguments that he advanced.

Mr. Nabarro: My right hon. Friend has demolished them.

Mr. Maudling: Our objective is the same. We want to sustain the value of sterling. That is essential for internal and external purposes. If our objective is the same we can choose between the methods of the present Government and those suggested rather tentatively by the Opposition—and when it comes to a choice between the two there is no doubt whatever on which side the balance of the argument lies.

5.3 p.m.

Mr. Michael Stewart: In following the right hon. Gentleman, I should like to make one or two comments upon his speech. The first thing that occurred to me, as a layman rather than as an expert in the science of economics, was that we all understand that the policy of the Government is not to finance inflationary increases. My right hon. Friend inquired how that Government policy was to be carried out, and drew an interesting picture of what would happen if it had to be carried out by bank managers making themselves the vehicles of Government policy. The right hon. Gentleman said, "That is absurd; no

body thinks that it will be done in that way." We all waited with interest to hear, if it was not to be done in that way, in what way it was to be done—but the right hon. Gentleman then moved on briskly to talk about the velocity of circulation.
My other comment upon his speech is that he showed a great desire to talk about 1951 rather than 1957. It is time that hon. and right hon. Gentlemen opposite, who try to avoid discussion of our present difficulties by referring to the grave difficulties of 1951, remembered one of the essential facts about that period. We were then engaged in a war—in military action—in accordance with our obligations under the United Nations. It was military action of a very grave and serious kind, and the successful resistance to aggression was one of the most important events in post-war history. This Government come to us at the end of this last twelve months having to their credit in that respect only the waging of an unsuccessful war against the United Nations.
When we were engaged in the Korean war every difficulty—political, military and economic—that the Government then experienced was ruthlessly exploited by the party opposite, from the Prime Minister downwards. Any attempt to compare the events of 1951 and 1957 while neglecting that fact is a dishonest presentation of the facts.
The main point that I wanted to make—and I am remembering Mr. Speaker's comments upon the desirable length of speeches—was the complete inadequacy of the Government's policies in view of the real problems with which we are faced. I have listened very, carefully to the two brilliant and learned speeches which have been delivered. What interested me was that, so far as I could judge, the conclusions to which economic science leads us in this matter are substantially the same as those to which common sense would lead us, namely, that if we want the country to get out of its economic difficulties we must learn to produce more. We must make an hour's work, a week's work, or a year's work more productive of things actually satisfying human wants.
In the short run, there may be considerations as to where we get our materials from, and how the balance of


payments position fits in but, in the long run, unless we learn to produce more we cannot possibly get out of our economic difficulties. It is all the more important that we should realise that when it has been so spectacularly demonstrated to us in the heavens recently that not only this country but the whole of the Western world is very gravely under challenge, both in regard to its power to produce destruction and weapons of war and also in regard to its power to raise its own standard of life and to help the more backward people of the world.
We have to ask ourselves whether or not it is going to be true that democratic societies, which do not possess the power to compel all their people to act together, and which do not possess the power arbitrarily to concentrate all resources upon particularly selected issues, have in consequence a lower survival value than dictatorships. That is the big question facing us at the present time, and if it is answered wrongly it means the disappearance of human liberty.
I am speaking of something that need not happen this year or next, but something that might very well happen in our lifetimes unless democracies can show greater purpose and efficiency in solving their economic problems than this country has shown under its present leadership.
Democracies, not being able to become united by compulsion and by shutting the minds and ears of their peoples to any suggestion from outside or any criticism of what the Government are doing, have to seek that unity by giving people a belief in social justice—a belief that the set-up within which they are working is basically a fair one. Democracies, not being able by mere order to concentrate resources upon certain selected objectives, have to be able, by wise leadership, to persuade the whole nation that in time of difficulty one's energies must be concentrated upon making one's methods of production modern and efficient, and on concentrating upon the most essential things in the whole productive task.
What are the essentials for us today? Because of the need of a democracy to persuade its people that the set-up within which they work is fair, it has to make proper collective provision for those who are in need for any reason; it has to see that those who are working are satisfied, in the main, with the rewards for work,

and it also has to see that the way in which wealth is distributed is fair.
Then we have to make proper collective provision for our defence, and, finally—most important of all—we have to make proper collective provision for the increase of our material equipment and our knowledge. It is those things that really matter if we are to get out not merely of the present economic difficulties, but of the menacingly declining position of the West in comparison with the fierce dictatorship of the East and the threat to human liberty that it involves. Those are the essentials.
How are the Government making out on them? I do not propose to say much on the first three because we have discussed them previously, but on the matter of collective provision for need I would say that the Government will have noticed the extremely cold reception that their rather inadequate pensions proposals have received. The fact that they are inadequate is evidence of the fact, to which we on this side of the House, both here and in the country, have drawn attention, that we cannot really make adequate provision for the old while we stick to the present plan of flat-rate contributions.
Why is it that the Government, with their far greater resources for discovery and research than can be available to an Opposition, are limping so far behind in this discovery? All that we have had from the Government is a rather silly and undignified performance by the Minister of Pensions and National Insurance trying to show that our proposals are unsound. The right hon. Gentleman was singularly unsuccessful in doing so, and merely drew public attention to the question of why is it that at a time when the Opposition, with comparatively limited resources for research and discovery, have put forward a workable answer the Government have only just begun to think about it?
On the provision for need, I hope that while thinking of pension rates some attention will be given to the earnings rule with regard to all benefits. This point was drawn to my attention very forcibly recently by a widow in my constituency who was just able to manage and then had a 10s. rent increase slapped on her. The only way for someone like that is a relaxation of the earnings rule principle.
The second thing I mentioned as essential was a just distribution of the wealth produced among those who are responsible for its production. When the right hon. Gentleman was challenged by my right hon. Friend the Leader of the Opposition as to whether he proposed to introduce any of the measures which went concurrently with an appeal for wage restraint in 1951, he again decided that it was more prudent to talk about something else.
I am not sure—I may be doing the right hon. Gentleman an injustice—but I do not think that he attended much of our debate yesterday. In view of his responsibilities today, that is understandable. If the right hon. Gentleman had listened to the debate yesterday he really would not have been able to get up today and say so calmly that of course the restraints applying to wages must apply to other forms of income as well.
The Rent Act is an invitation to a considerable section of the community not to practice restraint at all. The staggering thing about wage restraint is the fact that it is introduced after, to put it unkindly, the friends of hon. Gentlemen opposite have got in and taken their slice. The Government first of all pass a Rent Act and allow house owners to get a reasonable amount in their pockets. It is only after that that the Government decide that we must exercise restraint. Let us, said the Prime Minister, not be too anxious to see if we can chisel a bit off someone else. I wish that those golden words had been addressed to the landlords. One does not get the unity of purpose that a democracy requires by that kind of social policy.
The third essential which I mentioned was proper collective provision for our defence. Any one who heard the debate on that subject and heard or read the speech of the Minister of Defence will not feel that it is necessary for me to say anything much further about the Government's disastrous failure to meet that need. We all know that defence is financially and economically a great burden, but I do not think that we can get out of our economic difficulties simply by saying that we control it all by cutting down what we spend on defence.
We have to face the international situation in which we live. Moreover, I

believe that if our economy were expanded at the rate at which it used to be expanded before this Government came to power, and the rate at which it could and ought to expand, the burden of defence would not be too great. What is disquieting is to meet all this defence cost and then to find that what we are getting for it in actual power of defence is so remarkably short of what we ought to expect.
My last essential was the need for maintaining our material equipment and knowledge. That is supremely important if we are to be a progressive economy. Unless we can step up the rate of increase of the national wealth year after year nothing else that we have been talking about is really going to make sense at all. The remarkable thing is that if we had to describe what parts of the Government's policy are going to be most obvious to people who are engaged in public work throughout the country, we should have to say that they are a slowing down of the rate of development of the publicly-owned industries and an attack on education at a time when we are in an economic situation which requires pre-eminently more material equipment and more up-to-date equipment and a more knowledgeable and better trained population. That is the situation. The circulars that have been coming out from Government Departments are circulars that strike at exactly those two things.
In the development of a better-equipped economy we have to pay particular attention to the public sector. We have heard speeches from some hon. Members opposite from time to time trying to prove that most of our economic difficulties are due to mismanagement in the public sector of our economy. Let us face the fact that, despite the propaganda from the benches opposite, no one really believes that the fuel and power industries, from an old industry, from coal, to the new form of atomic energy, could really be run by private enterprise today. It behoves the Government, whatever their own political predilections, to make up their mind that these great public enterprises have got to be a success. Public enterprise is going to be increasingly something that modern society must use.

Mr. Nabarro: The hon. Gentleman referred to the publicly-owned fuel and power industries. I am sure he will immediately concede to the present Government that the rate of investment this year—which is the level pegged for next year and the following year—in the three nationalised fuel industries is, approximately, £100 million for coal as compared with £30 million in 1951, £233 million for electricity compared with £181 million in 1951, and £60 million for gas, which is more than two and a half times as great as in 1951. That means that in every industry, in real terms and in money, the rate of investment today is far higher than in the days of the Labour Government.

Mr. Stewart: Remembering Mr. Speaker's words about the length of speeches, I am not going to allow the hon. Member for Kidderminster (Mr. Nabarro) to rekindle the smouldering fire of my eloquence. We have heard all that before, and what we are talking about, and have to talk about, are the things of 1957.
I spoke at the beginning of my speech about the silliness of continually bringing up 1951. The question at issue is not how these figures of investment compare with 1951, but how they compare with the needs of 1957. We have been told that they are to be held at a certain level. My point is that any kind of check on the development of this part of the economy is the last rather than the first thing one should look at as a way of dealing with the present situation.
The point I was making was that no one in his sane senses really believes that the fuel and power industries should be run by private enterprise. Public enterprise is as essential a part of the equipment of the modern State as any modern machinery—telephones, typewriters, anything else. Any Government who want to serve their country must make up their minds that they are going to make public enterprise a success. The present Minister of Education genuinely tried to do that when he was Minister of Fuel and Power, and earned the hatred and contempt of a number of his hon. Friends in consequence. One of the drawbacks of a Conservative Government is that they do not really want to see public enterprises successful.

Mr. Nabarro: That is not so.

Mr. Stewart: It is a prejudice we cannot afford at the present time.

Mr. Nabarro: There is no hatred at all.

Mr. Stewart: I expect we shall have an opportunity of hearing the hon. Gentleman either today or on some subsequent occasion.
I come to the question of knowledge. It will not be denied, I think, that one of the Government's reactions to the situation has been to make educational economies. I much fear that greater ones are threatened. There is in the Queen's Speech a reference, in language which I think is obscure because there is a certain amount of shame about it, to the block grant proposals. I am not going to develop the argument on that now, because other hon. Gentlemen have referred to it already, and we shall have later opportunities this Session to discuss it in full, but I want to remind the Government of this.
There is not a person in this country who knows how the educational system works who does not believe that this block grant proposal is injurious to the development of education. Ever since it was brought forward the chorus of protest against it has swelled, and even the Times Educational Supplement comes at the end of the queue at last unable to endure any longer the injuries done by a Conservative Government to education.
That makes absolute nonsense in a situation where one of the things we want is an increasing number of well-trained and well-educated people. The right hon. Gentleman was ridiculing controls. What is the circular recently sent out from the Ministry of Education but a control? We are told that one of the things we cannot do is what are called minor works, so that there is no chance, for instance, of turning a dilapidated, ill-equipped school into something suitable for the middle of the twentieth century. We are told that rural education is to be economised upon. When we know perfectly well that the opportunity which children in country areas have is already seriously inferior to that of those in the towns and we ought to be considering how we can prevent this throwing away of talent, we are told that rural education is to be one of the things at the expense of which there is to be economy.
I am not going to attempt to argue the whole thing out statistically, but I do know this, that in the neighbourhood where I live, on the borders of Kensington and Chelsea, week after week new shops open devoted to the selling of antiques or to the provision of beauty treatment for dogs, or something of that kind, which adds nothing whatever to the total wealth of the nation. It seems to me nonsense to say that while that sort of thing can go on we cannot afford to give children in the countryside a better chance of education.
No doubt the amount we could do for more essential things by preventing frivolous waste not so much of materials but of the energies of human beings on unnecessary and undesirable luxury consumption is not very great, but the point is this, that we are living in a situation where this country has got to face concentration on the essential and where we have got in every way we can to encourage the people not to think that they can go on seeing luxury expenditure growing while vital things are being neglected.

Mr. Maudling: I am listening closely to the hon. Gentleman's argument, and I see the point he is making, but how in practice are we to stop people from opening antique shops? What practical policy does he advocate to stop the opening of what he believes unnecessary shops?

Mr. Stewart: To be quite frank, I am not going to attempt to answer now. Does the right hon. Gentleman not know perfectly well, however, that if the country once made up its mind that concentration on essentials was necessary to national survival we should find the answer to the right hon. Gentleman's question almost immediately? He knows perfectly well that that kind of thing can be done by a nation which wants to do it, and if he, in his Governmental position, cannot imagine administrative ways of doing it, then that is a shocking confession of failure.
Most serious is the failure to make anything like adequate provision for what will be the growing number of students in our universities in a few years' time. I asked the Chancellor of the Exchequer a Question about this recently, and he

referred to an announcement on 14th March last, an announcement which The Times newspaper commented on very adversely not long ago. It said, referring to the Government's proposal for help to universities in the next five years:
Yet vice-chancellors' estimates of the amount of preparatory development"—
that is, preparatory for the great growth in the number of people of university age we expect to have—
that their recurrent grants will make possible in the later years of this quinquennium range from 'negligible' to 'modest'.
From Cambridge comes the news in that paper:
Prospects of fresh developments within Cambridge University during the next few years could not be described as anything but bleak…
From Oxford comes the news that they cannot afford to keep the Bodleian Library open sufficiently long to meet the real needs of students. That is really an astounding thing to be occurring at a time when the Prime Minister tells us we have never had things so good.
Oxford University is reported to be faced with the prospect of a deficit of £89,000, says The Times,
…at the end of the current financial year because the amount of Government grant is not sufficient to cover present commitments.
Oxford reports that it is unable to make anything like adequate provision for the expansion we all know is necessary.
I have further references here to the Westminster Medical School, which is incapable of making provision for developments in medicine and veterinary medicine and agriculture; and to London University, which is unable to make adequate residential provision for the increasing number of students it can expect and which in the national interest it ought to have.
How much longer is this neglect going on? The whole situation is far more serious than the Government have realised. I repeat something I said to the House on an earlier occasion, that our whole civilisation is faced with the same question which Lincoln put in the middle of the last century, when he spoke of civilisation conceived in liberty and dedicated to the principle of human equality. The question is, can any society so conceived and so dedicated long endure? Will it have the vigour, the


vitality, the power to concentrate on essentials that the tyrannies have? Not under the leadership of this Government.

5.30 p.m.

Sir Thomas Moore: As so many other hon. Members want to speak, I will not comment on either of the Opposition speeches so far delivered, except to say that it was rather unwise for the Leader of the Opposition to charge the Chancel-/or of the Exchequer with lack of candour, and, in fact, with deceit, in view of what many of us still remember of the late Sir Stafford Cripps, in the days before he carried out devaluation of the £. He denied it on many occasions, as we can ail recall.
I would also express our regret at the abysmal ignorance displayed by the hon. Member for Fulham (Mr. M. Stewart) of the Conservative attitude towards the nationalised industries. Many hon. Members resent some of the Bills that are passed in the House and they argue against them, but, in a democratic Assembly such as we believe this to be, when the Bills are passed into law we accept them and try to make them work. That is the attitude of this side of the House towards nationalised industry.
It was the Government's decision to refuse to finance inflationary awards that caused the Opposition to put on the Order Paper its Amendment to the Address in reply to the Gracious Speech. I should like, therefore, to preface my remarks with a few words on inflation. This bugbear, this menace, this pest of inflation has threatened us for years past, and for years past successive Governments have either ignored it or appeared to despise it or just accepted it, but until today no Government has faced it and fought it. It is only reasonable to express our gratitude that at last we have a Government who have the courage to grasp this vicious, poisonous nettle.
It was with a certain amount of cautious timidity that the late Sir Stafford Cripps referred to the need for "increased productivity" as he called it, but that was as far as he dared to go. But, as many hon. Members have asked in this and in other economic debates, what does that phrase mean to the laundryman, or to the railwayman? How can they produce more? Speaking for myself, I should be prepared to produce more if I knew

how, but I do not know how to produce more or how to work harder. I am perfectly satisfied that I should be prepared to work longer hours for the same number or for fewer pounds if I felt sure that the pounds would thereby buy more of what I need.
Many of our fellow-citizens are still bemused by Treasury notes—those comparatively valueless pieces of paper, as paper, which are worth only just what they can buy. There is a feeling in a large section of the community that the more £ notes go into the pay packet, or the fatter the cheque, the richer they are. That is just nonsense. It will continue to be nonsense until and unless the Government finally succeed in controlling a possible run-away inflation.
Reference has already been made today to the mad inflation that occurred in Germany after the First World War and, therefore, there is no need to refer to it further. If Sir Stafford Cripps had courageously said that "we" must work harder or for longer hours, for the same or for even less money, he might have been understood, but to use words like "increased productivity" at that time, and even today, means very little. When I say "we" I mean all of us, the employers, the directors, the managements, the technicians, as well as the workers on the floor of the factory and at the bench.
I now have to say something which will create unpleasantness. The trouble up to now has been lack of courage among our leaders generally. Neither Governments, nor Oppositions, nor trade union leaders have had the courage to speak harshly enough, or tell the truth. Conservative Governments have been placed in a difficult position because of the declared hostility of leaders of organised labour. Many of us were shocked recently by a statement by one of these leaders that he considered industrial action might be properly taken to bring down the Government of the day if that Government was Conservative. That, in a most exuberant moment, was Mr. Hill, who is referred to by his friends as "Ted" Hill.
The present Government, therefore, have to walk very warily and delicately in their handling of industrial problems. The Opposition have kept quiet on the


subject for fear of losing political support. Trade union leaders have feared that such open speech might lose them not only their members, but possibly their jobs as well. This has all arisen from the tragic decision of the Trades Union Congress to ally itself with only one political party. I have never understood this anachronism. The purpose of the trade unions and their declared aim have nothing to do with politics. Their professed and proper aim is to safeguard and improve conditions of work of their members, and more power to their elbow and success in doing that. In my opinion, our economic health will never be fully secured until the unions and their leadership are completely divorced from any political affiliations, whether Liberal, Labour or Conservative. [An HON. MEMBER: "Or Communist."]
As the Government have so courageously gone so far, would it not be wiser to increase and develop their attack on this enemy, inflation? At present, as far as we know, the limits of their attacks are the credit squeeze, the restrictions on hire-purchase, the Bank Rate and the refusal to finance inflationary wage awards. Are those enough? We have had a declaration on the subject today by the Paymaster-General, but I sincerely ask whether it was right to balk at dividends.
I ask why the Government leave dividends untouched, if only for the reason that the psychological effect of dealing with them would have a restraining influence on wage demands and on the whole attitude of labour towards profits and dividends. I do not think that it is deliberate, but much misunderstanding exists in many minds about dividends. This is. I regret to say, largely due to the Press, which proudly announces one day that a record dividend of 15 per cent. or 25 per cent. has been paid by such and such a company. No doubt that company is rather proud of the publicity, but it would be fairer and wiser if the Press, when making such announcements, pointed out that the actual dividend, the return received by the stockholder, the owner of the shares—and many of these are in the modest-income group—is about 4 per cent. or less. I am sure that the confusion created in the minds of wage-earners and other workers would be readily relieved if that were done.

Mr. Charles A. Howell: The hon. Member might also like the Press to state how many bonus shares are issued as well.

Sir T. Moore: That remark reveals another misunderstanding, but I will not go into the subject now. It could be easily shown that no one is better off as a result of a bonus issue.

Mr. John Hall: Will my hon. Friend also agree that, while the real value of dividend income has fallen by 30 per cent., the real value of wages has gone up by 40 per cent.?

Sir T. Moore: I am glad that my hon. Friend has reminded me of that point and I hope that he will have the opportunity of developing it further. I seem to have started a discussion which has nothing to do with my speech. Perhaps I had better get on with it.
I was not quite in agreement with the statement made by the Paymaster-General that it would be improper to freeze either dividends or wages. Could there not be a general freeze for only one year, until this wild orgy of luxury spending has been halted and the enemy has been crushed? Quite properly, there is to be a freezing of investment for two years—

Mr. M. Stewart: And rents.

Sir T. Moore: Wait now—rents are a different subject altogether. The Government have shown great courage, as indeed with the Rent Act, in bringing forward oppressive restrictions which they knew would lose them support in the country and also possibly cause a certain amount of disunity amongst their own supporters, but which they believed to be right. If the Government accepted the proposal to freeze dividends as well as wages, it might lead us back to the unity of a one-nation country. We united to face the physical peril of war and succeeded in winning. Here is an even more dangerous enemy, this economic enemy of inflation.
We know that there are many wise, shrewd, far-sighted, and patriotic men on both sides of industry. We were greatly encouraged to read some of the remarks made at the meeting of the Institute of Directors last week. These showed that, if the will is there, we can defeat this enemy, but we must have the will and


we must got the leaders on both sides round a table, so that they can see each other's point of view. I was glad to read that the Chancellor took that step last week. We could then discover where the difficulties lie, where the misunderstandings lie, if there are any, and how they can be ironed out to ensure justice for all.
In conclusion, I believe that the general policy of the Government should be, as I believe it is, to offer suitable incentives to those who try, to give adequate rewards to those who succeed, to provide reasonable security for those who fail through no fault of their own. Finally, and this is important, they should ensure that justice is done to those on fixed incomes and pensions. That is the one section of the community without any organised strength but with the greatest grievance.
If we united that policy at home with a similarly intelligent policy abroad, I believe that there would be no end to the continuing greatness of Britain.

5.43 p.m.

Mr. Jack Jones: One could agree with much of what was said by the hon. Member for Ayr (Sir T. Moore). If what he said was shown to be accepted by direct evidence from the Front Bench of the Government, we would agree with what he said rather more than we do now. Actions speak louder than speeches, and I want to bring the House back for a few minutes to the situation as I see it today.
A few days ago the Prime Minister said that we had better not start to knock each other about. That was a laudable thing to say, but it is regrettable that the right hon. Gentleman said it after he had already set about the people who should not be knocked about. Here we are in the year 1957, when the Chancellor of the Exchequer was able to hand out largesse of £100 million to those who did not really need it, and in the same year the Government tell the old-age pensioners that there will not be even the skin off a sausage before next Christmas.
That is the kind of thing which is harrassing and bewildering and upsetting the ordinary working chap. We have listened to two brilliant speeches today, but I suggest to the Front Benches that if the average British working man reads HANSARD tomorrow he will still be harassed and

perplexed and worried. He is not worried about the balance of payments and the dollar and the fellow who preferred to put his money into the mark rather than into sterling. What Bill Smith wants to know is where he is going to get next week's wages from, how much they will be, and how long will they continue. That is the situation. What do people see around them? They see around them rising profits. I am not one of those fools who say that industry can be run without profits. There must be profits, there must be the finance to plough back, there must be new finance.
The hon. Gentleman the Member for Kidderminster (Mr. Nabarro) seemed to think he was scoring a point when he mentioned the huge amount of money that this year has had to be found for the three fuel and power industries. That is an indictment of all the money that was not found for them in the past. That is an indictment of the situation in which they were left. The more that is needed to be done today suggests logically that some of it, at least, could have been done in years past. But to talk about the years that have passed is like talking about water flowing under the bridge, it is futile; and this debate has something to do with labour relationships.
I am proud to come from an industry, with which I am still associated, which is proud of its labour relations. In the main, this arises from the fact that the men are paid for what they produce. They are paid to the third and fourth decimal part of a penny per ton, and it works. It sounds fantastic, but it works. Those men look to this Government, as they would look to a Socialist Government, to make it possible for them to make their contribution to solve our economic difficulties.
So does the agricultural labourer. Is anyone prepared to say that the agricultural labourer of this country, working in the greatest basic industry, is getting a fair deal? Is anyone prepared to say that, relatively, having regard to the cost of living, the man who can milk the cow, who can forecast tomorrow's weather, who can plough furrows, is being paid as he ought to be paid relatively speaking? Of course he is not.
Then we come to coal. I know that there are many mining representatives in


this House, and I know that they are perturbed. Once I got into an awkward scrape by talking about Saturday morning work in the coalfields. I remember being rather a lone voice in that connection. Well, we are not getting all the coal we want with Saturday morning work. How would we have been without it? Those men have made a huge sacrifice. I am the last man in the world to deride or belittle what the British miner is doing. He has the rottenest job of all, in the worst circumstances. Yet the facts are there to be seen and we must face them. Many of our young fellows in the mines do not seem to accept that sense of individual responsibility to their country that I would have them do.
I do not want to advertise the facts of absenteeism, but any miners' representative who talks to me in confidence is perturbed and worried. I should like to see the production we get in the week before Christmas every week in the year. That is asking a lot, perhaps it is asking too much. I know, however, that if this nation gave a sense of importance to the ordinary fellow, which it has never done up to now; if this Government would give credit where it is due, and stop talking about what people do not do, but talk about what they are doing and are capable of doing further, we should get somewhere.
Steel has been mentioned today. The industry is doing a great job of work. It cannot do any more with its present capacity. It works round the clock. It has worked 168 hours a week since long before the last war, and is continuing to do that. Labour relations are good; none better in the world.
I know that the leaders of the mining industry, including Jim Bowman himself, are worried about the situation. I happen to know that there is a well-founded rumour that he is looking around for guidance on a cure for some of the evils in the mines. And of course there are evils, of course there are black sheep in every family. Indeed, I might have been the one in my own. There are problems that have to be solved, and the Prime Minister was right when he said that we had better not start knocking each other about.
Having regard to the international situation, this nation is too small for it

to divide itself by industrial anarchy or industrial trouble. The hon. Member for Ayr said that one leader of a trade union had stated that he thought the ills could be cured by industrial action. That man was talking through his hat, and I tell him so publicly. Any industrial leader or any Communist shop steward, or indeed any Socialist shop steward, who seeks by industrial action to do something which will make the problem of my party greater when we come back to power is a fool, because we have problems big enough. I believe in my heart that the Labour Party will come back to power at the next election.
There are many other fools in this country, people who think that if they put a cross on a piece of paper in a different place from where they put it before, then they cure economic evils. They do nothing of the sort. What we must do is convince those people who put these crosses on the pieces of paper in sufficient number that, having done so, they should support and work for a policy which will bring about a reasonable climate in industry and a sense of fair play all round. At the moment that is not in evidence. It does not exist.
We must face the facts. The average man in the workshop is worried and perturbed. He listens to all the airy-fairy stories and then he looks at the Stock Exchange prices. He knows that big dividends are being paid, particularly in engineering, and at the same time he thinks—as he is entitled to think—that the Government, by their philosophy and their policy, are in some way trying to coerce the leaders of industry to prevent the workers from getting what they know they are earning. The Government Front Bench will argue that this is not so, but, like other hon. Members, I have found that my postbag is already full of resolutions on the subject from my constituents. I have received a spate of communications from National Health Service employees about it. I have heard from the railwaymen, too, because the Gowers Report has not been implemented. The Resolutions are beginning to be sent in to me in large numbers.
In this democracy of ours it behoves every one of us, regardless of party, to put our country first. Having travelled in many countries, I still believe that this little island of ours, with all its ills and evils, is the finest country under God's


sun. But those who are called upon to toil and work to maintain its preservation honestly believe that they are not getting a fair deal. This talk of trying to prevent wage increases and trying to clamp down on legitimate wage claims is leading to industrial trouble.
I am not one of those who claim to possess all knowledge about industry; I possess only knowledge of the industry from which I come. Nevertheless, I know that in the final analysis everything which is wrong has to be settled round the table. This idea of either a Tory Government or even the trade unions setting about the Government with a big stick, and believing that at the end of the day the evils caused by their so doing will have created a better position than that from which they started, is poppycock.
Let us consider the position in Germany. I am not surprised that foreign investors are investing in the German mark. I have been to Germany more than 40 times since the war, and what we see there we can believe. Whatever we think about the Iron Curtain or about the policies behind it, both Western Germany and Eastern Germany are going ahead economically. They have no Stock Exchange in East Germany and no fiddling of expenses sheets, etc. They have raw materials and labour, working under the compulsion of tommy guns, and they are getting production. It is the wrong way to do it, but the fact remains that they are producing commodities which are being sent into the world's markets, where they are competing with our commodities.
For the period they are to remain in power, which will not be long even if they run their full course, the Government will do well to seek to create a climate of opinion in which people will try to create wealth in order that everybody may live decently, instead of having luxury on the one hand and on the other hand, at the bottom, people struggling, as old-age pensioners are struggling today, on a bare pittance.
Yesterday I listened to the debate about rents. It is all very well to say that we should not knock one another about, but the body blows have already been delivered. The increase in the Bank Rate means an increase in costs for everybody buying a house. We have had the body blow about the suggested wage freeze

and the clamping down by the Minister of Health on an award, with his instruction that the award is not to be implemented. All those things militate against the best interests of a healthy climate of opinion and industrial harmony. Industrial harmony is essential if we are to survive. The more we knock each other about and the more we decide that political animus and venom will suit the best purposes of Britain, the more will Mr. Khrushchev and his pals laugh themselves to pieces.

5.56 p.m.

Sir Toby Low: There was a time, about four or five years ago, when it was invariably my privilege to follow the hon. Member for Rotherham (Mr. Jack Jones) in debates. Then, as now, apart from some political forecasts, I always found a good deal of jolly good sense in what he had to say. Then, as now, he was a good example to us of a man who did not mind telling the truth to his friends or his opponents and did not mind having the truth told to him. I agree with him that we do not want to knock each other about, but we must not be so pussy-footed that we are unable to tell each other what we believe to be the truth. In that I follow him and agree with him.
May I try to put before the House what I believe are some important factors about the present situation and the issues before us? I think it was a pity, to put it at its lowest, that in a debate opened by the Leader of the Opposition we heard from him no constructive proposals. He spent some time in a lucid and clear way trying to knock about some of my right hon. Friends on the Front Bench and then, in passing, he put forward the suggestions for exchange controls and some selective controls. In all those suggestions he was completely defeated and his argument explained away in a masterly fashion by my right hon. Friend the Paymaster-General.

Mr. Nabarro: He was demolished.

Sir T. Low: I do not think I need refer to the speech of the Leader of the Opposition, therefore, and I will turn to the terms of the Amendment.
It would appear from the terms of the Amendment I know this was meant to be a debate on the economic policy of the Government, but we must have regard


to the terms of the Amendment—that hon. and right hon. Members opposite really think that the removal of inflation will not strengthen our production and will not increase productivity. They appear to be making all this fuss because, as they think, in the short term production will not increase as much as it might have done and some investment will be postponed. The fuss has rather fizzled out this afternoon because the Leader of the Opposition himself admitted that the level of production by itself does not solve inflation. Indeed, he went so far as to admit—and my right hon. Friend, I know, agrees with this—that the level of production itself in certain circumstances can lead to more inflation.
We must have regard to the object of production. The object of production is to sell and in this country the main object of our industrial production must be to sell more overseas. Of course, if demand at home is increased we can sell more at home and we can produce more for home consumption, but that leads to balance of payments difficulties and to inflation as we experienced—we must be frank and honest about it—at the end of 1954 and the beginning of 1955. Those problems were solved by reducing demand; exports went up and imports went down.
It is quite a good thing to see how producers for export are affected by the present policies of the Government. Of course, productivity, efficiency, investment, good management and all that are very important to exports. There are, however, two factors which are of prime importance concerning exports. The first is one that we all know well, and that is prices. If our prices go up more than those of our competitors, we do not sell so much overseas. If our prices remain steady when our competitors' prices go up, we will certainly sell more overseas and we will certainly get more production at home; and not only will we get more production, but we will get a higher standard of life.
There is one other point about prices. If industry is able to quote firm prices for large contracts several years ahead, it will be in a far better competitive position than it is today. Industry is not able at the present time to quote firm prices covering several years ahead without

large contingency sums to cover increases in labour costs, in rail freights and in the price of coal and of other home-produced necessities.
We know perfectly well how labour costs have risen in recent years. They have been going up ever since the war. The Treasury Bulletin for Industry for September gives the figures for between 1950 and 1956. Wages and salaries rose by 70 per cent., output by 21 per cent. and the labour cost per unit of output in manufacturing industry by 40 per cent. In those circumstances, to put it at its lowest, we are hampering our export effort. That plays far more part in the level of production than anything else which has been talked about this afternoon. We cannot get round that by subsidies or by dumping. We cannot do that as a large world trading nation.
The first point, then, I want to make is that the best contribution to higher production and to higher exports would be steady labour costs. That does not mean that wages do not go up; it means that they do not go up by more than the increase in productivity.
My second point is that in selling overseas it is vital to our industrial effort that we are flexible. We cannot have a flexible economy if demand is too great. We cannot have a flexible economy if there is over-full employment. We saw that a year or two ago too.
We must have change in our industry. As some of my hon. Friends wrote in a pamphlet two or three years ago, "Change is our ally". If we examine our exports and the success of our industries we see how that success has depended upon change, upon new exports from year to year and almost from month to month. We must be flexible enough to deal with that. We cannot be flexible if demand is too high. We cannot sell if prices are too high.
There has been much talk about productivity, but do not let anybody think that getting our money affairs in order will not have some effect upon productivity. It will have an effect upon it because it will encourage efficiency in industry. Efficiency in industry is encouraged when economic conditions are such that the efficient man wins and the inefficient man loses or goes to the wall.
When we had a soft home market, that was not encouraging efficiency. When we have a tight home market, that is encouraging industry. The contribution made by my right hon. Friend the Chancellor of the Exchequer to industrial efficiency by the Restrictive Trade Practices Act is already being felt; it has already had its impact in industry. An even greater contribution, however, has been made by getting rid of the worst part of the demand inflation a year or two ago.
Now I come to investment. It has often been said, but it is worth saying again, that the present level of investment, even the level following the curbs recently imposed by my right hon. Friend the Chancellor of the Exchequer, is a level of investment leading to stagnation. That is a ridiculous argument. We have had from my right hon. Friend the Paymaster-General this afternoon the figures of increase in investment in the public sector and generally since 1951. They speak for themselves. Is it not just possible that if the Government ensure that only that amount of money is spent on investment which is covered by savings and can he represented by resources, we will get sooner rather than later the new plant which we all want?
There must be many cases known to hon. and right hon. Members of investment plans made three or four years back which have not yet come to fruition because the plant has been delayed. That has been due to the fact that we were trying to do just a little bit more than we could do. So do not let us think that a pause in investment need hit us very much, but let us all concentrate on trying to make that pause as small as possible.
There is one point I should like to make about investment in plant. In the last four, five or six years, I have had a good deal of experience in going around industry and I sometimes think that our crying need in industry is not necessarily for more plant, but to make better and fuller use of the plant that we already have.

Mr. Nabarro: Double shifts.

Sir T. Low: The October issue of the Treasury Bulletin for Industry contains a very interesting passage about the

American attitude to shifts in industry. It points out that American engineering industry makes far more use of three-shift systems than we do. As a result, American industry is able to make fuller use of its plant and to turn it over more quickly. If plant is turned over more quickly, the more quickly can the most modern and up-to-date plant be introduced into the factories. It may be that there is a part for the Treasury to play in all this in reconsidering the basis of depreciation allowances.
One other point which I should like to make about investment concerns research and development. Whilst I was at the Ministry of Supply, I learned the great value of the expenditure of vast sums of money on defence research and development. The great value extended into the civil field, and it can be seen now in many of the export orders that win us so much money overseas.
I am not advocating the maintenance of defence research and development for that purpose. What I do say is that it may well be right to rethink over the whole problem of the part that the Government, through the Department of Scientific and Industrial Research, or through some other central body, play in financing basic and secondary research and development proposals, because that, too, is vital for our production, productivity and success in export markets overseas.
I want to say a short word on industrial relations also, but before doing so I should like to mention one point about the Government's present policies. The Paymaster-General reminded us that economics was not a very exact science. I consider my right hon. Friend a very good man to remind us of that, because of all the men I have listened to in this House he has the ability most clearly to explain an economic problem so that I can understand it. All this clever talk from the economists on the benches opposite—they have all now left the Chamber—about the difference between demand and inflation, and the wage push or cost pull, whichever it is, of inflation, may be very good for debates in this House, but it does not help to solve the present problems. It is true that before when we have had a demand inflation that has been largely corrected by attacking demand. It is true that the main cause of the


present inflation is the push that constant increases in wages without productivity gives to prices and costs.
Surely, it must also be true that those wages could not be paid unless the money was there to pay them, and that is the reason why it seems to be right that the Government should tackle the problem of money supply. It is a great mistake for hon. Gentlemen opposite to think that the policies of the Government hit only at wages. They hit at profits too. The hon. Member for Rotherham said that profits were still rising. If he will examine the latest returns and statistics published in the Financial Times, he will see that that is not so. There are large parts of the engineering industry—

Mr. Jack Jones: Particularly in the engineering industry.

Sir T. Low: It is particularly the engineering industry in which the hon. Member will find that the position has been reversed.
In fact, these measures for curbing the supply of money will not hit directly at any one section of the people. If any one section is hit, it would appear, from the information one receives, that the damage will be caused to the one section of our people who have already suffered most from inflation. Do not let us think that either this policy or the general policies of the Government are aimed at or are likely especially to hit organised labour or the working people, They will not. After all, organised labour—the workers generally—have done better than any other section of the people since 1951. They have enjoyed a real increase in their earnings of 15 per cent., and we should not forget that. I ask hon. Members opposite not to forget it when they attack the Government for injuring industrial relations.
No one has thought more deeply about these problems than my right hon. Friend the Minister of Labour and National Service. Hon. Gentlemen opposite who know my right hon. Friend will agree, and the same could be said of many of my right hon. Friends in the Government who have had to deal with these matters. There is a better understanding in industry. Men are beginning to feel that they have a greater stake in the country and in industry. Certainly we can go further. And from the employers' side we were very

encouraged to read the speeches made at the recent annual general meeting of the Institute of Directors. Whatever anybody may think of the detailed proposals of Lord Chandos, the fact that he made those proposals at least shows that he and other leaders of industry are thinking of what is to come next after the end of the pause now advocated by Government policy.
It is important that both sides of industry should realise the necessity to think about what is to come after; when this policy has been the success which I am sure it will prove to be; when there has been a pause, and when we have had time for output to catch up with income. What is to happen after that? I repeat again, whatever one may think of the detailed proposals of Lord Chandos—and many of us think it would be wrong for any one industry to try to put all the increases of its productivity into increased wages—there is a lesson for us. We should think out perhaps a better system, a more secure system, for the aftermath so that men working in industry may know that they will enjoy the fruits of their labour.
I have had to go overseas a great deal in the past few years. In fact, when I was at the Board of Trade I visited 18 different countries, and I have been to one country since. I found out a good deal about our industrial production and export efforts during those visits. There was one thing which I encountered everywhere I went. It was that men who have respected and loved us were suspicious about our ability to cure our inflation. Because of that, some of them—not all, of course—did not order goods from us. Because of their suspicions about our ability to cure inflation, some of them do not leave their deposits of money with us, or else they move them away. We are now being judged in the world more than ever before on the simple issue, are we or are we not going to cure inflation; are we or are we not going to make our money honest at home so that it will be worth at the minimum 2 dollars and 80 cents. Overseas in the future?
That is the big issue and we must solve it. It does not matter what excuses or alibis we may have; we know that if we do not solve that problem, we shall go down. We cannot have the simple expedient of devaluing once again without it being far more disastrous than before.


While I agree with and support the policy of the Government that there should be no wage freeze, no Government wage policy and no interference in the established processes of the Treasury, I say with all the sincerity I can that we have to see that our costs do not go up. I believe that this Government and its supporters and the country will be judged on our success in that respect.

6.18 p.m.

Mr. D. L. Mort: I am sure that the House will forgive me if I do not follow the trend of this debate so far. I have a specific subject to which I wish to refer and in doing so I shall give a practical demonstration that I listened with attention to the advice which Mr. Sneaker gave us today about being brief. My subject concerns South Wales and the industrial revolution happening there in the tinplate and steel industry.
When we look at the past development and the modernisation of the steel and tinplate industry we note that over a period of years it has come along gradually. The people of South Wales, Monmouthshire and North Wales have known that this cloud would descend on them eventually. There have been many phases of it when we thought that there would be a disaster, but the industry recovered. Then we had 600 Italians to help us. Now, again, a recession has come into the world markets. Tinplate produced in modern mills is what people now require. The old tinplate mills and steelworks have gone out of commission. It has been a gradual process.
A lot of people displaced have been absorbed, but now saturation point has been reached. During the last fortnight, four industries have closed and two others have informed their workers that in a week or two they also will close. They are not only tinplate works, but steelworks. In my industry, Messrs. Stewart and Lloyd have just informed the people working in their tube works in South Wales that the works will close down within a very short period. The death of Sir William Firth stirred my memory about the progress that has been made. He was a great prophet and what he prophesied has come to pass.
The people in the tinplate and steel industries of South Wales are not Luddites. They do not complain about the wonderful things that have happened.

They welcome them. As I have said in this House before, God did not make men to work as hard as they did in the old-fashioned tinplate industry. Everyone with experience of it will agree. New conditions have come. There are many old philosophers in these industries. I spoke to one old tinplate worker who had lost his job. "Jim," I said, "don't forget progress." "I welcome it." he said, "but, my boy, if the scaffold is made of gold that is of no advantage if it is going to cut your head off." That is the kind of man of whom we are talking.
My plea to the Government and to the House is not an individual one; that would be bad enough. I have known these men for more than thirty years. I speak for the communities such as those in Gower. My hon. Friend the Member for Gower (Mr. Grenfell), as the Father of the House, will know Pontadawe, Gorseinon and Goweston. What is going to happen to them? The younger men will go away from them, as they must, to live. Those communities will be left with the older people. The Government should be aware of all this. They must be aware of it, because they appointed the Lloyd Committee with the definite objective of advising the Government what to do in such a situation, but nothing happened.
This is a great sociological problem and we must face it. Everybody will agree with the idea of Remploy, the wonderful scheme of Governmental assistance to disabled men, but here we are talking not only of men but of communities that may rot and die. That would be terrible. When people begin to lose hope, as they will in such a situation, they must be helped. What can the Government do.
I suggest that the Government should meet the employers whose works are closing and, if necessary, offer an inducement. The buildings concerned are very good industrial structures. The Steel Company of Wales has advertised that it will welcome the occupation of its buildings, and I do not suppose that it would make a charge. The Government could go forward in that direction. Something must be done so that this curtain—this iron, steel or tinplate curtain—may be drawn away. We cannot afford to let these communities die like modern versions of the "Deserted Village." The villages are deserted and every time the


gates of the cemetery open another step is made towards annihilation of the little cottages and villages.
I appeal to the Paymaster-General, the Minister of Labour, and others. I know they are sympathetic, but I want the House to declare that they must do something about one phase of this great industry which is now passing out.

6.26 p.m.

Sir William Robson Brown: It is a remarkable coincidence that I should have the opportunity to follow the hon. Member for Swansea, East (Mr. Mort) and to support him, quite spontaneously—I did not expect that he would speak or that I should follow him—in reference to the closing down of many steel and tinplate works in South Wales.
I managed many of these works myself. I have walked the floor of these mills. When I read the other day that these plants were to close down one by one, the news did something to my heart. Behind these mills were the hundreds of men whom I knew and remember. I hope that they have not forgotten me either.
I support the plea of the hon. Member for Swansea, East, to the Government. This is a very especial case, completely out of the ordinary. These people are in a grievous plight. It is no one's fault. It follows from the march of time, which is having its effect upon the small villages in and around the Swansea Valley and in Monmouthshire. Very careful consideration, the support of the employers and consultation with the Government are required to make some of those fine, comparatively modern buildings available at favourable leases, or even at leases with no rental attached in the first period, so as to bring new industries to those small communities. I say from my own knowledge that the employers in the Tinplate Association who are involved in this matter have, over a period of years, been compassionately planning for this sad day. They have made splendid provision for men in particular age groups who will be the most damaged and injured.
It may not be quite the same with the steel plants. I have a pretty good feeling that the employees of the steel plants will not find the company that employs

them unsympathetic; very much the reverse. There is no wish on their part to turn away thousands of men who have served them so long and so well. There is no class of labour in any other industry outside the pits that has worked harder than that in the old hand mills of South Wales.
The Prime Minister of our country made an utterance last week which every thinking man and woman supported, when he said that we were at a turning point in our history. He was thinking of the broader international scene. I know his mind was moving on the problems of inflation and the fall in the value of money. He was also thinking of the actions of the Government in the financial and economic world. I support every one of them without reservation. His appeals to labour were based on the vital urgency of the situation that we face.
Unless all of us—and I mean all of us, not one section of the community, and I shall define some of those sections which require to show more restraint than others and do not include old-age pensioners, war disabled and people living on savings and fixed incomes earned in other days, who have been forbearing beyond all measure—unless we all show this national restraint and national conscience we shall go the way of France. That is the road we shall travel. Where France is showing narrow self-interest France is destroying the nation and forfeiting the respect of the world. No longer in the eyes of the world is she a first-class nation.

Mr. Ellis Smith: She has been invaded three times.

Sir W. Robson Brown: Yes, she has been invaded three times; but that is not a reason for their not living up to their obligations as citizens of a great nation—a nation which could be great again. I cast no aspersions on the French. I hope that under their new Prime Minister they will find a new road. His rôle is one of toughness; the times demand a sincere and honest facing of the facts.
I have a feeling that on both sides of industry—in management and trade unions as well—there has been enormous temptation to think that there was some virtue and some advantage in inflation


and foolishly to try to float on the leaky water wings of inflation. Soon, if inflation is not stopped, we shall get deflation and the water wings will be deflated. If we do not stand together we shall again get mass unemployment and general misery for all. Those are the facts we have to face and I think the Prime Minister had them in his heart and in his mind.

Mr. Sydney Silverman: We have been telling the Government that for years.

Sir W. Robson Brown: Certainly, but hon. Gentlemen opposite have not stood up to the proper solutions. The hon. Member for Nelson and Colne (Mr. S. Silverman) will have an opportunity to speak later. I do not want to enter into an argument with him now, as he is much too clever a man for that.
Nations are not judged by the words of their leaders, clever as they may be, but by the actions, quality and behaviour of their people. That is what makes a nation great and that is why at this moment, speaking with all my heart, I say that the British nation is on trial and words have to be backed by action. What I believe the world is requiring and expecting of us at the moment is that we shall be able to stand on our own feet. The American alliance on the defence front and on the wide N.A.T.O. front, and the understanding between our two nations is absolutely vital and necessary. The general friendship of Americans for us is more deep and profound than we sometimes realise, but we must stand on our own feet and not always be turning to see what is happening in America before deciding what is to happen in our country.
The nations of the free world and nations which have not the standards we accept require that an Englishman's word should be his bond. Therefore, I suggest three vital points. First, the £ should be a solid, reliable, static £. I was in sympathy with part of a speech by an hon. Member opposite and I knew what he was trying to say, as it is in many of our hearts. Second, Britain must build up a free and secure society and way of life which will be an example to the world and the proper answer to Communism. We cannot answer Communism with words. We cannot tell people that

Communism is wrong in words—we have to show that in our country we have a free and secure way of life for all in the nation and that there is no exploitation of one by another.
Third, we have to aid and develop the backward countries of the world. We used to be tremendously proud, as I was as a young lad, to see so much of the world marked in red on the map as the British Empire. Perhaps in those days I did not realise the responsibilities which went with that pride. We cannot repudiate them today. If we have any value as a leading nation we must so conduct our affairs that there will be an excess of production of material and men to send out to aid and develop the backward nations. This whole question is far above party politics. It is a bitter regret that tonight we have to divide the House on one of the greatest issues facing the nation. Some of the young men in my constituency, young Conservatives, have asked, "Why can't you get together, you and the other side, and concentrate for a little time on the things that matter?"

Mr. Arthur Lewis: On the Rent Act?

Sir W. Robson Brown: Never mind about that. The hon. Member for West Ham, North (Mr. Lewis) can speak on these topics at other times; there is plenty of opportunity.
On this issue it is a question of the conscience of the nation being roused. There is far too much selfishness abroad in the land. The answer to the problem will not be found by everyone asking for more and forcing the cost of living still higher. If there were a referendum of the country and housewives were asked if they wanted their husbands to have more pay or stability in the cost of things they buy, I do not think there would be any doubt whatever that all the people would vote for stability, not for more and more wages or more and more profits and dividends.
A stern duty has been laid on both sides of industry by this crisis. It is not new. Political capital cannot be made out of it. Hon. Members opposite were in exactly the same dilemma in the time of Sir Stafford Cripps, and now we are facing similar difficulties. Unless we face them together and are truthful about the basic causes we shall never arrive at a


solution. Words alone are of no importance or value. I say quite bluntly that at this time in the nation's affairs anyone who selfishly pushes up prices without justification or regard to cost of raw materials and the like—which may be beyond his control—or who pays excessive dividends or asks for higher wages or shorter working hours without justification, is lifting his hand against our nation.

Mr. Lewis: And Surtax payers?

Sir W. Robson Brown: If we want the best work out of a team we have to pay a man for the value he gives, and that goes for Surtax payers as well as for anyone else.

Mr. William Ross: The hon. Member for Esher (Sir W. Robson Brown) prefaced that remark by saying that words are not enough and then used some words. Will he tell us how this could be achieved?

Sir W. Robson Brown: That is a fair question and I propose to develop it. I say, first, that we shall not achieve it by new waves of requests from all over the country for shorter working hours. That is the most positive way to failure. That is getting increased wages by the back door—worse than that, it is reducing the efficiency of the machinery. We have heard a speech this afternoon asking for double working shifts, yet we have widespread demands for shorter working hours. That is against common sense. The hon. Member for Rotherham (Mr. Jack Jones) made a speech packed full of common sense. He made the point that in the steel trade mills and furnaces are kept going almost all the time.
I want to say one thing about profits. We must bear two things in mind—that excessive profits are an aggravation and a provocation; but we also must bear in mind that there is a terrible risk in running any industrial concern. We cannot guarantee, fix or control or relate profits, particularly when we are competing with the exporting countries of the world. The British Motor Corporation is an outstanding example. In the earlier part of the year, it was actually making a loss, but that loss was transformed very rapidly into a profit by the turn of trade.
I have been long enough in industry to know that in one six months period one can be in a profitable position, but that can be changed by the turn of trade and in another six months one can be in a position of loss. Therefore, it is the duty of every company to provide in every way that it can for a good level of profit and plough back a considerable amount of its resources, both to reserve capital, and, more particularly, to the development and building of new plant.
I want to say a few words about the Conservative Government. In one particular way, I think they have fallen short. One of my hon. Friends referred to speeches made at a meeting of the Institute of Directors the other day. I would remind my colleagues that seven years ago I put a proposition before the Central Council of the Conservative Party, propounding a workers' charter to be prepared and presented by the Conservative Government to the workers of our country, in order to show that the Conservative Government understood their problems and sympathised with them. My main plank on that occasion was the one put forward the other day by Lord Chandos—a proper notice related to years of service. I say to the Government Front Bench that we have been too long in preparing our proposals in this matter, and we have not done the greatest amount of benefit to our country by taking so long.
I have heard play on the word "productivity." I think that "productivity" is one of those complex words that the working man does not understand. We cannot relate productivity to every job and task throughout the nation. I suggest to the House that it is not always higher output that is the complete and absolute answer. It may be, when trade is settling back a bit, that what we want is better quality and lower costs. Do not let us just chase the word "productivity." I do not think that we should object to it in the mines, but that is another matter and I do no want to deal with it tonight.
Generally, in industry, I think that this talk about productivity has very often gone over the head of the working man. I suggest a very homely phrase that can be better understood—better co-operation. Let us start a new watchword both in Government and in industry of better


co-operation inside the factories with unions and management and extend this right across the national front.

Mr. Lewis: And in the Health Service?

Sir W. Robson Brown: I do not think that it is reasonable for the hon. Member for West Ham, North to interrupt in that way.
I want to finish on one particular aspect of national affairs. There has been comment on every hand about the amazing development of Germany. No one will deny it. There has been comment about the amazing development and revival of Japan. No one will deny that. What grieves me here is that I understand that today Japan has become the leading shipbuilding nation of the world. That takes some swallowing in this House and I think that the shipbuilding employers and employees had better put their heads together to find the answer to it.

Mr. Nabarro: "Screwy" strikes.

Sir W. Robson Brown: There has been a great deal of excitement in the Press about Sputnik I and Sputnik II. I suggest that they are scientific seven-day wonders. They have their place, but they have done one thing which I do not think the Russians intended that they should do—at least I hope that they have done one thing. The industrial menace of Russia is not from Sputnik I or Sputnik II, but from the fact that if she can succeed with Sputnik I and Sputnik II there is no industry or technical development in which she cannot achieve success, if she has the will.

Mr. Silverman: Why is it a menace?

Sir W. Robson Brown: I will tell the hon. Gentleman. If the Russians were dealing with a labour force and a standard of living such as we have in this country, I would not say a word about it. It would be fair, equal competition; but the Russians are dealing with a substandard people. I will not debate that, because the evidence is there. Russia is dealing with people who have no freedom, no unions, no voice and who are told what to do. They are led today by the greatest mass army of technicians that the industrial world has ever known. I am not worried about a third world war

so long as we watch our defences, but I am worried about a first economic war instituted by Russia. She will be able to select one particular industry or set of industries and by her cheap labour and technicians flood the markets of the world with the deliberate intention of creating economic chaos for us in the West.

Mr. S. Silverman: I do not want to interrupt the hon. Member, because I have been listening to his speech with great interest and a good deal of sympathy. I understand what he says about the absence of civil liberty. But he was talking about the power which the Russians may have to increase their productivity in any industry, and he called that a menace. Quite apart from all the other things which are not debatable now, he surely does not want the House to understand that if the Russians produce more and more industrial goods of a civil kind that would be a menace to anyone.

Sir W. Robson Brown: The answer is obvious, and I have already given it. If the Russians were competing on an equal and fair basis and working cooperatively with the rest of the world, and if they were not now, as I am much afraid they will be, using their economic strength as a weapon to create disruption in countries in order to try to force mass unemployment and bring the creed of Communism into lands in which they could never get it in any other way, I could understand and sympathise. I do not quarrel about the United States or Japan or Germany and their production. It is all on an equal and fair basis. [An HON. MEMBER: "Not Japan."] The British people have never been afraid to take on a fair fight, whatever it may be. But we are in very great danger in our own country of paralysing ourselves by tying our hands and indulging in talk of class war and petty arguments in industry, instead of getting industrial peace and facing the facts of life by everyone in every section of the country pulling together.
I want to say something sentimental. I know that the House does not like sentiment, but I am going to say it. On Sunday I watched a memorial service. I stood before a certain war memorial, and what impressed and puzzled me is how men of all types and classes can stand


together, fight together and die together on battlefields and then, for some extraordinary, inexplicable reason, come home and start quarrelling with each other. Let us get something of the spirit of the men who died in the war. They handed the bright torch on to us; do not let it flicker out and die.

6.50 p.m.

Mr. John Diamond: The hon. Member for Esher (Sir W. Robson Brown) has said many things with which most of us on this side would agree. He spoke with great sincerity, and those of us who know something of his activities outside the House know that he puts into practice what he says about labour relations and management generally. But he was liable to interruption from my hon. Friend the Member for West Ham, North (Mr. Lewis) because so much of what he was saying had no relation whatsoever to what his Front Bench is saying and proposing, and what his Government are doing. For that reason, one finds it difficult to relate his speech to the rest of the debate.
He was right, of course, in saying that if any inquiry were made of our housewives as to whether they would prefer a stable price or a wage war—as I think he said—they would prefer the former. Of course they would, but that is not the option before them. They are asked to agree to a rise in price and to a limitation in wages. That means a fall in the standard of living, and that is what they are asked to agree. The hon. Gentleman must be completely out of touch with a great number of things, and I invite him to go around some of the less well-to-do parts of his constituency and find out some facts—

Sir W. Robson Brown: I perfectly understand the problems of the working man, and I hope that I keep very much in touch with him. What is beyond my comprehension is the argument that if we stabilise wages, we reduce standards. I should very much like the hon. Member to develop that argument.

Mr. Diamond: I will. I am seeking to draw attention to the fact that the proposals of the Government have no relevance to this problem. Their proposals will not do that at all. What the Government are doing is launching an attack

on the living standards of the workers. It is as plain as plain can be. Those are the points with which I want to deal a little more fully on this occasion, when I speak with considerable humility—but, at all events, hon. Members opposite will be relieved to know that they will not be put to the abominable trouble and almost impossible insincerity of giving effect to the usual courtesies when I sit down—

Mr. Nabarro: A partial maiden.

Mr. Diamond: I would not wish to deceive the House at all. Hon. Members should not regard me in any sense as a maiden. I would rather they regarded me as someone with a six-year-old beard, cut after the style of one R. V. Winkle.
I want to put before the House arguments that will, I hope, destroy for good and all what is implicit in every recent announcement of the Government—that it is the workers who are responsible for the lack of improvement in production, the workers who are responsible for inflation, the workers who are responsible for all our present ills, and that the only thing one can do about it is to stand up to the workers and to their unions. That is implicit in everything that has been said from the Government benches.
It is the Government that are responsible for the fall in production, for inflation, and who are deliberately responsible for starting an attack on the living standards of the workers at a time when, as the hon. Member for Esher has said, we need the fullest possible co-operation and the fullest understanding of the needs of the workers.
Coming back to this House, as I do, after a long time, it is very obvious to me that the Government have adopted, as does any weak man who has failed, the policy of finding someone to blame—a scapegoat. That is the simple answer to everything they are saying. Let us look, first, at production and see whether any of the Government's proposals will improve it. Increased production flows almost entirely from new ideas, and new ideas are a function of management. Production has very little to do with the workers at all. We can get more production by having more workers, but we are fully employed. We can get more production by the workers working longer hours, but they work pretty long hours as it is.
I do not know whether any hon. Member has recently had the experience of trying to canvass during the day time, and of going to house after house only to find the householder and his wife out. Both are at work. Occasionally, the householder is in, but fast asleep upstairs—and heaven help one if he is disturbed, because he has to be on at night. Occasionally, the housewife is in, but she is in to look after the children, and as soon as the husband comes home to take over she will be going out to do cleaning and the like in the evening.
That goes on in house after house. I remember, on one occasion, canvassing a whole street and finding only one woman at home—with her one-day-old baby. I had to canvass her through the bedroom window, and as she was then the mother of five, and I was the father of four—

Mr. Nabarro: No wonder the hon. Member has been away for six years.

Mr. Diamond: —we had a useful exchange of views. I hope that it is accepted that everybody is hard at work and that, therefore, there is little one can invite the workers to do to increase production.
There is a great deal one could invite management to do, but it all mostly depends on increased efficiency. That is derived from technical progress and technical advance, and calls for new plant, new machinery, new ideas, and money to back it. That is where the Government come in, with their three-pronged attack of the credit squeeze, the high Bank Rate and the cutting of investment plans, and, in some cases, the cutting back of investment.
As to the credit squeeze, I understand that it is the instruction of the Government that the banks should not authorise advances in excess of those ruling over the past twelve months. That may mean 1956, or it may mean part of 1956 and part of 1957. One knows that in 1956 the supply of money in relation to the national income—which is the only real test—was the lowest since 1927. What possible cause can there be, in those circumstances and with those statistics, to limit bank advances which could usefully be given to those who need to invest further so as to increase our productivity? There is no question there of too much money going about.
A 7 per cent. Bank Rate is a thing unheard of in this country for thirty years, and a 2 per cent. increase in the rate is a thing unheard of for over a century. It is an astonishing decision. The Government have been pleased to call it a policy; I prefer to call it a plain admission of defeat. A 7 per cent. Bank Rate cannot be called a cure for inflation; it is a symptom of inflation. Unfortunately, it is with us, and we have to deal with it.
What is to be the effect of borrowing against a Bank Rate at that level—borrowing at 8 per cent., 81 per cent. or 9 per cent.? Who can afford it? Only the most profitable of industries. There is no correlation between the most profitable and the most essential; if anything, it is the other way round. We can certainly say that here is one of the selective controls that the Paymaster-General was so anxious to decry. Here is a selective control that selects against the needs of the basic heavy industries.
The one type of industry that cannot afford it—it has been referred to already, and is one in which unemployment has started the one type of industry affected by a Bank Rate of this magnitude is one that is socapitalised that it turns its money over virtually once a year, against the average industries which do so twice or three times a year, and the very light industries which may do so three or four times a year.
Whether an industry can afford the Bank Rate simply depends on what is the charge of that Bank Rate against its profits. If it turns its money over once and borrows at 8 per cent., then the charge is 8 per cent. If it turns its money over twice, then at the same rate of borrowing the charge is 4 per cent. If it turns its money over four times, the charge is 2 per cent. An increase in the rate of interest has no effect whatever on the light industries. It selects against the heavy industries, against the basic industries, against the industries we need to support above all others.
It is not right to say that the only argument against a 7 per cent. Bank Rate is that it is the wrong sort of instrument and ploughs down everything ahead of it. It does worse; on the whole, it selects the most necessary industries for its worst effects by clamping down on investment. Those industries, we know, are working


well below capacity. They need the additional finance. They can sell anything they make. Nevertheless, the Government are to hold them down and to prevent the increase in productivity which is needed to solve our inflationary situation.
Another method of increasing efficiency is to have a wage increase. It should not be overlooked that one of the best stimuli to increased efficiency is increased cost of labour. That is what makes managements put their caps on and start thinking. The reason why the American kitchen is full of gadgets is the high cost of domestic labour in America. The reason why we transfer from manpower to horsepower, which is the way we achieve efficiency, is the high cost of manpower. Having manpower too cheaply, just as having coal too cheaply, tends to cause the inefficient use of our resources.
I should be the last to say that reasonable increases in wages in any way work against efficiency. Quite to the contrary. I hoped that we should hear more about this from hon. Members opposite. The managements with which the Government Front Bench are in touch are unknown to me. I must say in all fairness that I have come across an entirely different reaction. Apparently, as soon as the management to which the Government are accustomed have difficulties in bringing down labour costs or producing more efficiently, they write letters to the Prime Minister complaining about what these horrid trade unionists have done and asking how in the circumstances they can carry on their business.
The managements with which I am accustomed to deal react much differently. If they have problems of this kind they say, "How can we overcome them? How can we increase our efficiency? By what method can we proceed so that, instead of employing three men, we employ two at a higher rate and release the third for useful production work elsewhere?" It generally means some new idea, some new technical development and some new capital, and it is this capital which the Government are determined that these firms shall not have. That is the position against a background where the money supply has been lower during the past year than at any time since 1927.
The facts of production are very well known. We know that, unfortunately, during the past six years production has increased at a critically poor rate, and we on this side of the House think we know the reasons for that. I am dealing at the moment only with the facts. I suggest that the Government are responsible for this critically poor rate. Through their policies throughout their life—policies which they are continuing—they have been responsible for preventing production from forging ahead as fast as it otherwise would have done if management and men had been allowed to get on with the job together. The Government's policy has prevented that from happening. I cannot see why the Government have gone out of their way, in view of the desire to improve labour relations, to give this unwarranted insult to both managers and workers by blaming them for the lack of production in this country today.
I turn to the question of wage increases. Some hon. Members opposite, and certainly the right hon. Member for Blackpool, North (Sir T. Low), thought that the 7 per cent. Bank Rate would stop wage increases because there would not be the money to finance them. This is an unusual thought and I cannot believe that it is true.

Mr. Nabarro: Nobody said that.

Mr. Diamond: The right hon. Member for Blackpool, North said so, specifically, and it is part of the policy of the hon. Member's Government that it should be so. They keep repeating that their purpose is not to finance increased wages. The hon. Member could not have been in his place when it was said.
Let us see what happens. The cost of financing increased wages is negligible. It has never yet presented managements with any problems. At the most, it will mean a diversion of some capital from some capital development project, but the cost of financing wages week by week is a very small cost indeed. The capital element required does not enter into it at all. When it begins to mount up, all that happens is that it is dealt with by taking a little longer credit from the creditors or shortening the term for the debtors, or reducing stocks very slightly. That will solve it, or, if not, one simply does not replace plant; one does not keep up with plant, never mind improve it. Certainly if one has a project for development and


is faced with the fact that one will be short of cash at the peak time of the year because wages have risen, then what suffers is capital development. Wages have to be paid.
Wage increases have never yet been refused on the ground that the employer has not enough money. They have been refused on the ground that the employer has not enough profit—that the profit and loss account does not justify it, not that the balance sheet does not justify it. That is an entirely different consideration and I am sorry that the hon. Member for Kidderminster (Mr. Nabarro) cannot understand it. It is interesting to note that as far as he is concerned things go on very much the same as they did six years ago.
The point which I am making is that the 7 per cent. Bank Rate will not have the slightest effect in stopping wage increases because of the small amount of capital required for them. The Government realised that and therefore found it necessary to reinforce it by their first there would be no wage increase without broadside, by producing this formula that a growth of real wealth. It will be appreciated immediately that if the Government had thought that the 7 per cent. Bank Rate would achieve its purpose in stopping wage inrceases there would have been no need for them to say a single further word about it.
Let us look at the background of this policy, see how it will work and see what conclusions we can draw. Let us see how fat the workers have been getting at the expense of the community since right hon. and hon. Members opposite came into power and I, unfortunately, went out at the door. Since 1950 production has risen, broadly, by 3 per cent. per annum. Since 1950 the real wages of workers have risen, broadly, by 2 per cent. per annum. There has been a 2 per cent. per annum increase in real wealth for the workers and a 3 per cent. per annum increase in real wealth for the nation.
Is there anything wrong with that? Does anybody suggest that the workers have had an unfair share? Does anybody suggest that doubling the standard of living in fifty years—which is what is meant by 2 per cent. per annum—is too short a time? Although I was not here to hear it said, I have been told that the generally accepted philosophy of hon.

Members opposite is that there is no reason why the standard of living should not be doubled in twenty-five years. It will be fifty years' time at the rate things are going. Hon. Members opposite are continually accusing the workers of this country, as they did this afternoon, of ganging-up through their unions, getting an unfair advantage through their bargaining strength against the community, and drawing an unfair share of the nation's wealth.

Mr. Julian Ridsdale: Nobody mentioned it.

Mr. Diamond: I see nothing wrong with the workers getting a 2 per cent. share if the nation as a whole gets a 3 per cent. share.
The right hon. Member for Blackpool, North referred to rising costs, in the sense of the cost per unit of production. The interesting point about that, so far as the timing of this latest onslaught of the Government is concerned, is that in the past eighteen months the costs per unit of production have been going down slightly, mainly caused by the slight rise in production in the last few months. This formula is very unsoundly based. Worse than that, it cannot possibly be interpreted in the way in which it is intended to be, to help in Labour negotiations.
I should like to consider one or two cases that I happen to know about. I have certain responsibilities of a very unimportant character in relation to Sadler's Wells. Sadler's Wells and Covent Garden recently had a strike. The chorus struck and went to arbitration. At the arbitration the matter was settled on its merits, as every argument should be. Suppose this had taken place not a month or two ago when I was occupied elsewhere, but in a month's time after the arbitrator had had the benefit of the information which has now been given by the Government about increased production and harder work and so on. On what sort of basis would he settle a strike, between employer and employee, of singers in a chorus? Are they to be told to sing twice as loudly, or twice as long, or to get top G instead of F?

Mr. Arthur Holt: This is a very important point. Would the hon. Gentleman say on what basis the original arbitration decision was made?

Mr. Diamond: The original arbitration decision was made on its merits.

Mr. Ray Mawby: What merits?

Mr. Diamond: Both sides put their case before the arbitrator and the arbitrator decided what the answer should be. He took all matters into account. I was not the arbitrator, and I know not what went on inside the arbitrator's mind. Indeed, I think it essential that nobody should know what is going on in an arbitrator's mind if one is to have a fair arbitration. I am unable to say which argument weighed most with him. He took all the factors into account, but what he did not take into account was increased production; nor could he.
Then there is the railway system. When I was in Gloucester recently I attended several meetings of the N.U.R. branches, and at that sort of level people are talking in very matter-of-fact terms. What I found them discussing were methods of securing the safety of the public and other matters arising out of the introduction of diesel engines which, as we all know, will mean that there will be less manpower required on the railways and increased efficiency as a result. There is no need for a fireman when there is no fire to stoke, as in the case of the diesel engines. But we do need greater security by reason of the fact that there are not two men in the engine.
These were the matters which these men, some of whom would be declared redundant as a result of this conversion to diesel, were discussing sensibly, constructively and with a desire to co-operate fully with the British Transport Commission. If any argument were to arise about railwaymen's wages, I do not know how this would be decided under the latest terms relating to increased production and productivity that are to be put forward to those who have to negotiate and arbitrate. What a lot of nonsense that is going to be in relation to an engine driver. Has he got to get to Brighton ten minutes earlier or has he got to do his job properly as he is told to do it, and as every worker is told?
The Government are slowing down the plan for development. The Government are postponing the day when there shall be railwaymen free to take on other productive jobs because the diesels will have

taken the place of the old steam engines. That is what the Government are deliberately doing. As a result of the announcement of the Chancellor, they are slowing down the railway programme.
There is a third case that I would mention with some delicacy. I have found, to my pleasant surprise, that the remuneration for the job of a Member of Parliament today is not what is used to be. I do not know whether there was increased productivity by M.P.s. I do not know how many night sittings there were last year. I am told there were none.

Mr. Ross: Not unless one was a Scotsman.

Mr. Diamond: What nonsense it would be to try to decide a fair remuneration for a Member of Parliament on the basis of increased productivity. It has to be decided on its merit, as every other wage claim has to be decided. Let us not hide our heads in the sand about that.
As we know, there are some 4 million workers who automatically get a cost-of-living increase without any negotiation or arbitration of any kind. Do the Government expect the millions to sit back and watch their mates get this increase while they get nothing at all? Is that what is intended if, as a result of the Government continuing their present policy, production does not go up but remains static? The Government have got us into an impossible situation which can be interpreted only as the Economist has interpreted it and as the hon. Member for Oldham, East (Sir I. Horobin) interpreted it when he said:
If the Government then continue to let the trade unions get away with it, they will produce a political situation which will make Gloucester look like a unanimous vote of confidence."—[OFFICIAL REPORT, 29th October, 1957; Vol. 575, c. 98.]
The Economist said:
The Government has made plain its view that the nation would be better served this winter by standing up to strikes than by giving way to inflationary wage settlements.
That is the real interpretation which every one of us must put on the latest move of the Government. That is the effect that these decisions will have unless we help those who are going to be prejudiced by them. It is the bankruptcy of policy of the Government which has, no


doubt, driven them to this—a situation in which wages are going to be fixed and costs are going to rise as a result of continued inflation. It is a situation which is absolutely intolerable to those of us on this side of the House.
It may be that some of the things I have said savour more of the hustings than of what is customary on these benches, but it is not out of place that from time to time hon. Members opposite should be reminded of them. It is not surprising when we think of the various people who have "never had it so good." I know the workers are supposed to have "never had it so good." My hon. Friend the Member for West Ham, North (Mr. Lewis), I believe, also agrees with me that it is the landlords who have "never had it so good." As for my constituency, they have had increases on decontrolled houses of 300 per cent. time and time again. I do not want to confuse the House with figures. I am talking of the 300 per cent. increase in rent which the landlords have had, and not the 3 per cent. increase in wages which the National Health employees have been refused.
The same remarks would apply to a number of others, and particularly to those who have money to lend, who also have never had it so good. Their standard of living is going to be doubled in ten years' time at the present rate of interest, as compared with the twenty-five years which the Home Secretary suggested and the fifty years which the workers are offered, and to which hon. Members opposite object.
It is not surprising that I want to associate myself as strongly as may be with this Amendment censuring the Government, coming as I do from a constituency where, two years ago, two out of every four electors were supporting hon. and right hon. Gentlemen opposite and where today three out of every four are against them. That tells the story, whether or not hon. Gentlemen opposite care to argue and not recognise the facts about what is happening over rent increases, rates of interest and the increasing cost of living. Those are the real facts of the situation, and if hon. Members have any doubt about them they can take the honourable course and go to the polls.

7.21 p.m.

Mr. Julian Ridsdale: I hope the hon. Member for Gloucester (Mr. Diamond) will forgive me if I do not follow in detail some of his arguments, but I cannot allow some of the inaccuracies of his speech to go unanswered, particularly when he said that we on this side of the House wish to attack the living standards of the workers.

Mr. Lewis: Hon. Members opposite are already doing it.

Mr. Ridsdale: I know that I can speak on behalf of all my hon. Friends when I say that that is completely untrue. We wish to attack the cost of production, because it is the cost of living that matters, not only to the workers, but more particularly to pensioners and those living on fixed incomes. As was said by my right hon. Friend the Member for Blackpool, North (Sir T. Low), what matters is that what we produce we should be able to sell abroad. It is the cost of production which, if not checked, can have such a disastrous effect on our export trade.
That is why we have welcomed the Government's determination to fight inflation, but the Opposition Amendment talks about policies designed to increase production and productivity. I can see the argument that it is vital to keep up investment, but the right hon. Member for Leeds, South (Mr. Gaitskell) talked about production and I sometimes wondered whether he meant production at any price. How does the right hon. Gentleman propose to produce increased investment? By going to the public sector and trying to encourage further public investment such as he said Mr. Harrod might want? Where is the money to come from for that investment to be carried out?
The point that I want to put forward this evening is that, at the present moment, whilst fighting our wages inflation, if we are to keep up our investments and cure inflation, it can only come now from spending less on the part of the Government, from decreasing taxation and seeing that these savings are taken up for investment in the private sector of the economy.
I feel bound to say that unless the Government act on these lines as soon as


possible, they will find that they have cured inflation at home only to place our private industry behind in world markets, because its equipment is not up to date. I would therefore press the Government to act very much along the lines suggested by the Amendment on the Notice Paper in the names of myself and my colleagues from the Liberal-Unionist Group, urging that,
in view of the fact that high taxation is in itself inflationary, to take bold steps to reduce taxation so that the finance required for further capital requirements, both in the public and private sectors of industry, comes from the real savings of the people.
Wages are, of course, one factor in rising costs, but let us not deceive ourselves. High taxation is another, and I am convinced that if we are to help industry to compete more favourably in the export markets at this critical time, it is vital that we should take all possible steps to reduce taxation so as to encourage saving, but not consumption. Such reductions could take many lines. For instance, cannot we help with further initial allowances? Are we certain that we have been doing all we can to help shipping in face of the serious threat from flags of convenience?
As the Financial Times said last week:
Company earnings are the main source of finance for the re-equipment and modernisation of industry and the rate of return on capital is probably the largest single influence on investment programmes. Falling company earnings are not likely to bring about the high investment that the Government wants.
Indeed, as the Financial Times pointed out, private investment cannot be turned on and off like a tap. The interval between a change in policy and the production of goods from completely new factories can be a very long one. That is why I consider it vital at the present moment that, hand in hand with our policy to stop the wage inflation, should go a far-sighted policy to encourage investment in industry by reducing taxation.
There are other factors, too. Is not the high rate of taxation, especially at the managerial level and at the level of the skilled and the technician, forcing more and more of our best men to leave the country? Is not high taxation itself inflationary in that as investment by Government so often exceeds real savings, it forces a rise in the price level, and in the end the saving is done by those people

least able to afford it—those living on fixed incomes and retired, and we all know from our constituencies the types of people who have suffered because Government saving is not always balanced by real savings? It is indeed this rise in prices which over the years has stopped the habit among so many of us of saving at all, even if we had the money. How often have many of us during the last six years said, "I had better save and buy it now, because it is only going to go up later."
I know it is all very well to ask for more saving and investment, but surely we have to make certain that the individual or the company has the money first. From what sector of the economy can these savings be made? I am sure that for too long we have been shouldering far too big a share of the burden of western Defence. It is for that reason that I welcome the Prime Minister's visit to Washington, and I only hope that it has brought savings which are vital if our economy is to face up to the economic challenge that faces us.
I welcome also the new financial arrangements between central and local government. They should provide thrift and responsibility in local government's expenditure. I do not agree with the hon. Member for Fulham (Mr. M. Stewart) who said that this would mean cuts in education. I believe, too, that much that is paid out to local authorities by the Public Works Loan Board should be raised by local authorities direct from the market, and that the various acts of Parliament under which so many of them shelter, and especially the county councils, to cover their extravagances, should be vigorously examined and amended where necessary.
Has the last word been said about the financing of the nationalised industries? I consider that one of the items of top priority for the Government is to devise a scheme as urgently as possible to see that investment in the nationalised industries is done on a voluntary basis of saving from outside. I know that the answer which the Treasury and others will give is that people will not risk their money in it. But if the real savings of the community are taken away by the Government in high taxation, how can they?
In any case, who were the people who found the capital for the American,


Argentine and Chinese railways? It was the private British citizen, who in those days was not taxed almost to the point of extermination or of being driven out of these islands. Further, if our nationalised industries were put on a proper business basis, they would attract foreign capital in the same way as many of our great industries in the private sector of the economy do.
With such reductions in spending as I have tried to outline, it should be possible, I am certain, to take bold measures to reduce taxation. Where should these reductions go? I am convinced that, at this present moment, they should go to help savings and not consumption. I have already suggested that we should do far more to help our shipping and industry engaged in the export market. I am certain that it would be idle for us not to do something to dissuade skilled people and technicians from joining the queues to go abroad. Whether we like it politically or not, we must do more to reward quality and not mediocrity. It is vital that we ensure that our industry is competitive and put on a far sounder basis for investment. Reduction in taxation will prevent waste, too, in Government spending and the unending price rises which are caused, in a subsidiary way, by investment not being balanced by real savings.
What is more important is that the measures I propose would give hope again to the individual citizen, for they would make it worth while for him to save again. We should have broken out of the wretched strait-jacket in which our economic life has been almost imprisoned since the end of the war. We must be hold and brave enough to create an economic climate in which saving is possible. We cannot do this if we are half-hearted in our belief in a free economy. We can never have that faith restored until we reduce taxation.
I say to the Government, "You nave given us a most encouraging lead in one sector by showing your determination to hold down wage inflation. I trust that you will give us a lead in the other, and take bold steps to reduce taxation so that the finance required for further capital requirements in both the public and private sectors of industry comes from the real savings of the people."
Surely, the real difference in outlook between the Government and the Opposition is that if hon. and right hon. Gentlemen opposite were in power, they would increase investment in the public sector at the expense of the private by increasing taxation. Provided that we are able to hold the wage inflation, I am convinced that we can increase investment by lowering taxation, but only if we make sure that the Government spend less.

7.33 p.m.

Mr. A. Blenkinsop: I have been very interested to hear this treatise read to us by the new Liberal movement, as I assume it must be. I have been told that there is a great spread of Liberalism, and the mere insertion of the word "Unionist," I suppose, does not mean very much in addition to the word "Liberal." In this interesting speech with regard to the economy of our country, anachronistic though it was, I suppose that we were listening to the rebirth of Liberalism. I hope that there will be more opportunities to hear other Liberal versions later on.
The thing which is astonishing to anyone on these benches is to hear the hon. Member for Harwich (Mr. Ridsdale) painting a terrifying picture of the country and its economy, battened down under this terrifying burden of taxation, even though his right hon. Friend the Prime Minister only a very short while ago told us all that we have "never had it so good." It is very difficult to reconcile the two positions. It is important that hon. Members opposite should begin to live in the world of today and not hark back in their minds to conditions before the war.
I want very briefly to refer to a matter which has already been raised in our debate on the Address. It is one in connection with which I have had some responsibility in the past. The Health Service is the first sector of our economy to be touched by the Government's new policy on wages. It is tragic that the new Minister of Health's first action in this House should be to defend his attack on wages in the Health Service, an attack which has caused great disturbance indeed throughout the Health Service and may lead to its disruption. It is very


tragic that, instead of a new Minister of Health being able to announce to the House development proposals he may have in his mind or explain his interest in the work of the Ministry, he should have had to make his first speech on behalf of the Treasury, announcing this very severe attack upon Health Service employees.
It is unfortunate that we have had a succession of Health Ministers. I am very sorry indeed about the reason the former Minister of Health had to resign his office, and I hope that he is recovering in health. It is a great tragedy that this Department has been under so many heads during the last five years, and, as I say, it is all the more tragic when a new Minister comes along, after only a matter of weeks in his Department, and has to make this his first action in the House of Commons.
I am all the more amazed at this action of the Government because I should have thought that, in this House, we recognise the value of the Whitley machinery and the difficulty of operating it in the Health Service. I know that the Whitley machinery has been successful in operation in the Civil Service and local government for many years, but in the Health Service there have been many special difficulties, some on the staff side and some on the management side.
I suppose that it is inevitable that we should have so very many separate functional councils. It is equally inevitable, I suppose, that we should have on the staff side both professional and trade union representatives with not altogether a similar approach to the problems. In spite of that, some unanimity of view has been built up in the Health Service Whitley Councils over the last few years, helped to a very great extent by the recommendations of the Guillebaud Committee which were acted upon by a previous Minister of Health, whether the immediate predecessor of the previous Minister, I do not know.
The recommendation of the Guillebaud Committee was that the management side of the Whitley Council should be more fully representative of those who actually employ the staff, that is to say, of the management committees of regional hospital boards, with a reduction of the representatives from the Ministry of

Health itself. That recommendation of the Guillebaud Committee was adopted and acted upon by the Government, by a predecessor of the present Minister. Apparently it is that action which the present Minister, and above all the Chancellor of the Exchequer, now condemns. He has repeated on many occasions that the management side of this Whitley Council has a very small minority of Ministry of Health representatives, and, therefore, in effect, they were unable to block this particular proposal for a wage increase which was, in fact, agreed by both sides. As I say, it seems rather extraordinary that the very action which succeeded in bringing about better relationships in the Whitley Council should have been so rudely cast aside by the present Minister.
There is another point. I do not know whether the Minister of Health or the Chancellor of the Exchequer, or, possibly, the Financial Secretary to the Treasury, has read a book published only a short while ago by Professor Chester and Mr. Hugh Clegg, of Manchester University, on the history of the working of Whitley Councils in the Health Service. That book, which is a factual account of the development of these councils, makes it perfectly clear that the Whitley machinery has always acted, in fact, to delay wage advances. It has acted in support of Government policy, if Government policy it is, to try to hold back wage advances. That has been a major criticism of Whitley Councils from the staff side, but it could be said that if conditions were reversed—if the general tendency were for deflation and wage reductions—the staff might obtain an advantage from this machinery. They have continued to support it even though it is in many ways disadvantageous to them.
The Government are endangering the future of the Whitley Council procedure even though that procedure has throughout the years of its establishment worked in their favour and has, in many cases, held back wage advances which should have been paid much earlier. Indeed, it is clear from the position of the clerks and administrative workers in the Health Service that they have not enjoyed the wage advances which have been paid elsewhere. I imagine that at least one reason for this is the lengthy procedure of the Whitley Council machinery, which inevitably results in this holding back.
It is, therefore, a very great tragedy that the spokesman for the Health Service should have been singled out by the Treasury to make this attack. It is unfortunate, as the Minister is probably beginning to recognise, that the effect is not only upon the particular group of workers in the Health Service, but is upon the Health Service as a whole. If there was ever a service that needed the loyal co-operation and understanding of the people within it, professional and otherwise, it is the Health Service. Unhappily, the Minister of Health has endangered that working together.
We have at the present time a very great opportunity for leadership. It is perfectly true that many workers realise the absurdity of the position in which they are placed in pressing for wage advances which result only in price increases. It is equally true that a vast majority of workers have become sick and tired of the amount of overtime that they are working. One hon. Member earlier in this debate spoke about the need to keep up the hours of work—at least, he said that there was no pressure for reducing the hours of work.
The hours of work have been increased over these last years and we now have the absurd position that a very large part of the workers are doing as much as three nights' overtime a week, plus frequent overtime at weekends. A good deal of that time, they believe, is wasted, but it is almost essential that they should get the overtime to have any decent rate of income at all in modern conditions.
That is a matter that could perfectly well be discussed, with many other matters concerning the efficient working of industry, between the unions and management, with the Government perhaps coming in also, industry by industry. This could bring real results in improvement. However, those results could be obtained only if the Government for their part are willing to set the seal by making it possible for the parties to enter into the negotiations. Therefore, this is a political matter.
If the workers and employers are to come together to any purpose, the Government must show their willingness by taking action to hold prices in so far as they can do so. The Government have today a far better opportunity than any

Government have had before. They are working in conditions in which the prices of goods imported from abroad are falling, and not rising, as has been the position faced by past Governments. These are very favourable conditions in which to act.
It is up to the Government to take action in the spheres for which they are directly responsible. That means, above all, irrespective of any views which have been expressed before, that they must be willing to review the effect of the Rent Act upon the wages of workers. This is one of the essential tests. The Government must be willing, for example, as part of their bargain to show a willingness to reduce the interest rates, at least on housing, to meet the position of those who are attempting to buy their houses.
There must be something much more definite offered in the way of control of dividends and action in relation to capital gains of all kinds, including the pools and the Government's own Premium Bond scheme gains. When an earlier speaker in this debate said that unhappily the country was suffering from too much selfishness, he was quite right, but who is to blame for that? The Government are encouraging the whole atmosphere of selfishness. We on this side believe that this is the whole basis of the division between the Socialist viewpoint and the capitalist view, as expressed on the benches opposite. We believe that this Government can appeal only to the most selfish instincts of the community.
That way is barred for the future. It is only if the Government are willing to make a wider appeal to the higher instincts of the community that they can have any hope of success. The responsibility is upon them. If they cannot offer these pre-conditions, they must give way to a Government which can.

7.48 p.m.

Mr. F. M. Bennett: In the debate today, as in the recent two-day economic debate, most of us on this side of the House have noticed the extraordinary degree of shadow boxing by nearly all the Opposition speakers. It is especially exemplified today by the extremely sparse attendance of Opposition Members at a time when their thunder is supposed to be rolling in criticism and censure of the Government for bringing about the


downfall of the working people. Yet the Opposition can muster no more than about four Members in the Chamber. This bears out my contention that there is indeed a degree of shadow boxing.
That is not surprising, because we all know perfectly well that the Labour Party, when in power, faced precisely the same problems as we face today. We also know that when they attack us for taking certain measures today, they all too often took those same sort of measures themselves under exactly similar difficult circumstances. Nor is it any good for Opposition speakers, when Government spokesmen remind them of these things, to say that it is unfair to dig into the past and that we must dwell solely in the present. What the Opposition are doing is to present themselves to the country as strongly as they can as an alternative Government. Therefore, the people are entitled to be reminded of the steps taken by Socialist Ministers when they were in office. It is not, therefore, merely a negative matter of digging into the past.
Dealing first with the point about wage increases and productivity, the Paymaster-General today quoted from a speech by the Leader of the Opposition, when in Government himself. We are all fairly used to a certain degree of political inconstancy in the views of the Leader of the Opposition and therefore should not be surprised to see a change too on this front. But there was one Minister, unfortunately now dead, Sir Stafford Cripps, whose integrity was believed in fully by all of us, and it is worth recording what he said on three occasions about wages and productivity.
One remark was:
…we cannot afford increases in wage levels or shorter hours unless they increase productivity per man year."—[OFFICIAL REPORT, 10th March, 1947; Vol. 434, c. 994.]
He also said at the Trades Union Congress, in 1948:
There is only one way by which, with a given volume of employment, we can increase our real standard of living, and that is by each of us producing more. There is no other answer.
In 1949, at Workington, he said.
You must be patient, and you must not ask for or expect any further advance in social standards or wage levels until we have been able to increase the productivity of our industries…

I defy any hon. Member opposite to say that in any single respect those quotations differ from our appeals in the same vein which are nevertheless attacked as "a wage war" and "a war on the trade unions."

Mr. Blenkinsop: The hon. Member must accept that in the days of the Labour Administration, Sir Stafford Cripps made sure that the burdens which had to be shouldered were borne equally. The basis of our complaint is that that is no longer true.

Mr. Bennett: I should be happy to be diverted along that line, but I must not allow myself to do so because of the promised need to keep my speech short. When one compares the level of the cost of living, the value of real wages and the value of pensions under the Socialist Government, not one of those factors bears out the claim that the ordinary people were better protected than they are now.
It is said that we have had a great number of production cuts and that that is a crazy way to solve our problems. Now we have had an extremely modest statement by Ministers to the effect that we are doing no more than restraining production from an actual increase in the coming year. I feel, however we may differ over diagnosis, we all agree that the inflation in the time of the Socialist Government was a demand inflation. Yet in 1947 the Socialist Government thought it right, at a time when inflation was caused by a too great demand and a too little supply, to introduce cuts of £200 million in the investment programme, which was 16 per cent. of the total programme for the year. Faced again with a similar economic crisis in 1949, they introduced cuts in the then investment programme of £140 million or 10 per cent. of the total programme for the year. Is it possible now for any Socialist spokesman to attack as wrong, foolish and misplaced the extremely limited pause which we have made in our productive drive and at the same time give no explanation for the savage cuts in investment which the Labour Government made?

Mr. Cyril Osborne: The Labour Government cut food subsidies in the same year.

Mr. Bennett: They also put ceilings on the National Health Service.
During this debate we have had a large number of criticisms about the 7 per cent. Bank Rate. I have not yet heard a spokesman of the Opposition suggest what the Socialist Party would do about the Bank Rate if it formed the Government. Do hon. Members opposite think it should be lowered? Do they give us a pledge that if they should form a Government they will lower it? Do they think it is much too high or a little too high? Are they suggesting that they might go back to the happy days of cheap money and the 2½ per cent. Bank Rate? Is that what this censure of the Government involves? If they put themselves forward as the alternative Government we are entitled to know the facts.
There is a misplaced idea about the Bank Rate and its effect. It seems to be thought that the act of reducing the Bank Rate necessarily makes money cheap. No greater fallacy exists. The actual cost of money, as with any other commodity, is determined entirely by supply and demand. The reason the Bank Rate was increased is well known. It was partly for psychological purposes and partly for practical purposes. It has had the effect of restoring our gold and dollar balances in a remarkable way in the last few weeks.
But it is a fallacy to believe that by pulling down the Bank Rate it is possible to make money cheap or plentiful. Canada has, I believe, a Bank Rate of 5½per cent., but no business man would imagine that he could borrow at anything approaching that figure if he sought to establish a business there. The other day the hon. Member for Reading (Mr. Mikardo) tried to attribute all our export problems to the rise in the cost of money and not to the rise in wages, which, he said, was insignificant. He said that that was what was making us uncompetitive with the rest of the world. That was a remarkable statement. One of our chief competitors is Germany. Germany has a low Bank Rate, but the current rate for borrowing for business purposes is 9, 9½ or 10 per cent. Yet no one can deny that the Germans do well in the competitive export field.
Again we are told that we have invested and are investing far too little overseas from the point of view of the future of this country and of the territories concerned. Let us look once more

at the record. Between 1946 and 1951 the Socialist Government invested overseas an annual average of £80 to £90 million. Between 1951 and 1957, on the basis of Treasury figures, this Government have invested an average of £180 million, double the amount of the Socialist Government. As the Socialist Government invested only half of the amount the Conservative Government have invested, it makes their attacks in this context difficult to understand.
If we take investment in the Commonwealth only, but including grants-in-aid and other help given to Colonial and other dependent territories, we find that we are currently investing by direct and indirect methods more than £200 million a year. We frequently get the cry from the Opposition that we should increase our investments in dependent and underdeveloped countries to a target figure of 1 per cent. of the gross national product. Yet on the figures which I have given we are already at present by this method investing 1¼ per cent. of our gross national product in those territories.
I am not sure that the Government have yet found the answer to inflation. I am not sure that any Government in any country has found it. It is not a British problem alone. We are all striving within the limits of a free economy—I do not imply by that any difference between our two sides; I am talking about a free society—to find a method of solving the problem of inflation. I am not sure that we have it yet. What I am sure is that the Opposition, from their record and their pronouncements, have not got it either. It is utterly false for them to suggest to the public that they have the answer to inflation.
No matter how much the Opposition may be able to fool themselves and the electors—and I hope they will not be able to fool too many electors—the people they have not managed to fool are those overseas who buy and sell the British £ and trade with the British £. Whenever a Gallup poll shows a drop in Conservative strength and whenever there is a Conservative reverse at a by-election, hon. Members should look at the Financial Times and see what has happened to the value of the £ overseas. The people overseas are not politicians; they are simply business people. The moment that


investors overseas, corporate or individual, believe there is a prospect of the Labour Party coming back into power, the value of the £ slips.
That is not a political assertion by me; it is a plain fact, which can be checked by anybody who doubts my word. Indeed, I do not think that it is doubted. One of the problems which the Socialist Opposition have to face is that, as an election approaches, if there is even a prospect of their getting in the value of the £ begins to fall steadily throughout the world. Nor has this been said first by a Conservative, namely, myself. Some years ago the right hon. Member for Dundee, West (Mr. Strachey) wrote an article, or a letter, which was later much criticised by his colleagues, in the New Statesman and Nation, in which he said that we ought not to fool ourselves, and that if a Socialist Government were returned the gold and dollar reserves would be leaving this country in a torrent. He was not far wrong.
I am not worried from the point of view of this preoccupation on the part of the Socialist Party, but I am worried on behalf of the country and the Conservative Party. Our Government already have severe economic problems to face. In addition, they are having to pay back large amounts in dollars for loans contracted and spent before they came to office, and now they have to face in times to come the problem of maintaining foreign confidence against the fear of a Socialist Government coming into office.
For all those reasons I wish the very best to Conservative Ministers, and indeed I think that they deserve all the confidence, help and support that they can get from us.

8.1 p.m.

Mr. Robert Edwards: I should like to follow the argument of the hon. Member for Torquay (Mr. F. M. Bennett), but I resist the temptation because I want to deal with two aspects of the Amendment before the House. I do not doubt that those who speculate in British currency will very greatly fear the return of a Socialist Government, because that Government will do something about the parasites who produce nothing but who live very luxuriously all over the world by speculating in other people's currencies.

Mr. F. M. Bennett: It is not fair to talk about people as speculators when they are customers of this country. It is not right to speak of them as if they do nothing but live overseas as parasites. If a country which is an international banker, as we are, wants to call its customers speculators, it must stop being an international banker.

Mr. Edwards: Confidence in this country is based upon the toil and intelligence of the industrial workers, and the security of our economy. No Government have done more to shatter the stability of our economy than the present Administration. They have reduced productivity and production. The cost of living in this country is almost the highest in the world, and our production is almost the lowest in Europe.
I have not the slightest doubt that bankers and financiers, while they are allowed to exist in this world without producing anything, have much more confidence in a country which balances its economy and gives the workers a real incentive to increase the volume of production, so I reject the suggestion made by the hon. Member.
The first point that I want to concentrate upon is the tremendous harm which the Government have done to industrial relations. I feel certain that they do not realise how dangerous a situation they have created. Over the years we have built up a system of collective bargaining based, fundamentally, upon the balance of strength in industry. It has never been abused by the trade unions in a state of full employment. If the trade unions worked in complete unison and made big demands they would have to prevail; no force in this country could prevent them, because it is the workers who do the work. It is the miners who dig the coal; the steel workers who make the steel; the chemical workers who make the chemicals, and the clerical and administrative workers, the nurses and doctors, who run the social services. It is the toilers who make possible the normal functioning of this House of Commons.
If they all worked in unison and fought for their demands, those demands would have to be met. Because this is a fundamental truth it should be clear to everybody that our British trade union movement has been very restrained in its demands. Apart from Western Germany,


where the situation is rather different, and Holland, where they have a realistic wages policy, we have had fewer days lost in industrial disputes over the last seven years than any other country in the world.

Mr. Douglas Glover: Under the Tories.

Mr. Edwards: I said during the last seven years; not merely under the Tories. It is because of our collective bargaining system—which the Tories are trying to undermine—and because of the common sense of the British trade unions that during the last seven years the number of days lost in strikes per thousand of the industrial population has been only 151, whereas in America during the same period it was 1,500. In Japan, Australia and Canada the figures are infinitely greater than ours. That very sensible situation in industrial relations is in very serious jeopardy because of a political decision of the present Government to interfere in the most calculated way in the normal practices of collective bargaining.
I am the general secretary of a trade union. In my industry, the chemical industry, only very local disputes have occurred. But what is the overall situation? In the Health Services we have the Whitley Council. We have decent workers who are very lowly paid. In my constituency some are receiving only £7 10s. a week. They are decent human beings, doing a job of work in the hospitals because they want to do a spiritually satisfying, human job. These folk have had a very poor wages deal. If there is any doubt about it, let us take a quick look at the facts.
Let us consider, first, the men earning from £385 to £390 in 1948. In the Civil Service since 1948 salaries have increased by 56 per cent.; for teachers the increase has been 60 per cent.; for local government workers 45 per cent.; in the electricity industry 47 per cent., and in the gas industry 51 per cent., but in the health services it has been only 34 per cent. They are right at the bottom of the scale. In the case of men earning between £490 and £495 a year in 1948 there has been a 71 per cent. increase in the Civil Service; a 62 per cent. increase for teachers; 46 per cent. for local government workers; 46 per cent. in the electricity industry; 45 per cent. in the gas industry, and only

33 per cent. for those in the health services.
There is no doubt that these good folk, clerical and administrative workers, who earn less than £1,200 a year are right at the bottom of the wages scale. They are not a political body; they are not even affiliated to the Trades Union Congress. They have never talked about militant action to maintain their claims. They have always been reasonable. Yet today these people have been forced to declare a ban on overtime. This seems to me to be scandalous. The Government are committing a dastardly crime against the people and against the interests of the nation.
If that is what the Government propose to do with the workers who have an unanswerable claim, what is to happen when the railwaymen make their claim? Does it mean that the railwaymen will be forced into a national strike, merely because they are trying to maintain their wages in line with increased prices? Is it a crime for a trade union to function as a trade union, to keep the earnings of its members in line with the rising cost of living? The industrial workers of this country, and these health workers to whom I have referred, are not asking for the moon. They are asking merely for a decent financial hold on life; not for luxuries or for extra pounds a week. They are asking for a 3 per cent. increase in their very low salaries; and the Government have denied them the right to enjoy that modest increase when their own Whitley Council unanimously decided in favour of it.
What are these people to do? They are being provoked into extra-constitutional action because they have no other means of expressing themselves. What is to happen if this stupid, disastrous policy is pursued in respect of a claim from the miners? Are we to have the same dogmatic, deliberate, calculated refusal'? Have we really fallen for this stupid idea that we can have a show-down with the trade unions and split this nation, with the resulting welter of an industrial upheaval? Do hon. Members opposite really think that will solve the problem of inflation?
I read the statement in the Economist and I am amazed that intelligent people in a country such as ours, with an economy which is balanced on a knife edge, should seriously argue that maybe


it would be cheaper to force the unions into a strike and empty their treasuries than to have an annual increase in wages. What kind of economic anarchy is this? They do not understand the first principles of the struggle waged by the industrial workers. I remember a strike that lasted for nine long, bitter months. The strikers did not receive any strike pay and the first "sub" they got from their employers they used to pay their back trade union dues. Uninformed people should not dare to try to gauge the attiture of British trade unionists by the amount of money in their funds at any given time. If the workers are forced into a strike, those responsible will be doing a great disservice to the country now and for the future.
I beg the Government to have second thoughts about this matter. I beg them to look again at the question of the 3 per cent. increase for the health workers; to call a meeting of the Whitley Council and agree to accept the decision. That would not be considered as a defeat for the Government. The members of the Government would be regarded as being bigger men than before. The British people are not stupid about these things. They are prepared to overlook a genuine mistake and to forgive those politicians who are big enough to admit an error of judgment.
Another question which has been discussed frequently in this debate is that of wages and productivity. If productivity is to be tied to wages, the British productive industries will have to face big wages claims. I have been examining this question and I find, regarding one sector of my own industry, the drug and fine chemical sector, that in 1937 the output was £21 million. By last year that figure had increased to £143 million. The increase in the number of workers was only 20,000. Bearing in mind this increase in the labour force and increased prices, the real increase in output amounted to 300 per cent. The wages of the workers have not increased by anything like that amount.
On examining the general question of wages and productivity, I found that since the 44-hour week was introduced in 1948, output per worker in the manufacturing industries has increased by 23 per cent. But the real earnings have increased by only 17 per cent., so that there is a big

surplus which has been enjoyed by the rest of the community. It has not been sucked out of the industry by the productive workers. In the engineering industry, for example, the output since 1948 has increased by 28 per cent. per worker, and their real earnings have increased by only 18 per cent., which means that in a unit of production where the workers earned £5 they are receiving only 92s. for that unit.
In the whole chemical industry during the same period output has increased by 54 per cent., but the real earnings of the chemical workers have gone up by only 20 per cent. If tomorrow we argued a case for increased wages based on actual production, we could claim, on the figures published by the Government, an increase of 22s. a week for every £5 earned today.
The argument which has been used during the debate about inflation being caused by wage increases does not hold water. The workers have been restrained in the demands made through their trade unions. They have not exploited "over-full employment" as it is called. They have not used their strength to increase unreasonably their weekly earnings. They have considered the general interest of their fellow-workers who are not in productive industry, and the increased cost of the social services. They have taken into account the fact that this country has to compete in the markets of the world. They have considered the difficulties of the nation, and it is a very grave injustice for hon. Members opposite repeatedly to argue about inflation being caused by increases in wages.
I have spoken for longer than I intended and there are other arguments which I wished to advance to the House, but time does not permit. In conclusion, I urge the Government to reconsider their attitude regarding the trade unions. It is a battle which in the end the Government will lose. They might win a few temporary votes from the middle-class who are always afraid of bogies. But people generally are becoming increasingly "bogy proof," and no matter how much they think they will, the party opposite will not win elections in this way. They may consider that they can plunge the country into a series of industrial disputes, then call a quick election and frighten the people and thus win


votes. If they won a cheap victory in that way, at the next General Election they would be wiped out of the political life of this country. It is because I think this kind of confidence trickery is harmful to British democracy that I urge the Government to reconsider their attitude, particularly in relation to the justifiable demands of the workers engaged in the health services.

8.20 p.m.

Mr. Montgomery Hyde: I am sure that the hon. Member for Bilston (Mr. R. Edwards) will understand if I do not follow him in his interesting speech, because in the few minutes that I propose to take up of the time of the House I wish to look at the question of production and productivity in the economy of a part of the Kingdom which has not been mentioned so far this evening, Northern Ireland.
In doing so, I am reminded of the true story of the young English writer who went to the St. James's Theatre where he met the Irish author of a successful play. The younger writer had just written a successful book. The Irish dramatist who met him said, "I have a bone to pick with you about the book you have just published and about the way you have treated me in it." "I do not understand," answered the writer. "I did not even mention you in my book." "That's just it," replied the Irishman.
The bone which I have to pick is that in the Gracious Speech there is not a single reference to Northern Ireland. There are references to Malta, Cyprus, Canada and even Milford Haven. We do not grudge Milford Haven having its harbour, but one would have thought there would be some reference to a part of the Kingdom which, in the past twelve months, has been faced with a remarkable combination of civil disturbance and economic difficulty.
There have been more than two hundred incidents caused in Northern Ireland by illegal organisations and resulting in damage in excess of £600,000. On the economic side at the present time the number of registered unemployed in Northern Ireland amounts to more than 29,000 people, or 6.2 per cent. of the total number of insured employees. It represents only a reduction of 7,000, or

1·5 per cent., since the setting up two and a half years ago of the Northern Ireland Development Council.
I am glad to see in his place the right hon. Member for Blyth (Mr. Robens), who knows something about this subject. At the end of the last Parliament he introduced a Motion relating to the economy of Northern Ireland. During the debate, the then Home Secretary said that an Economic Development Council was to be set up, and on that occasion I said this:
It must be our constant hope and prayer in Northern Ireland that, with the establishment of this Council, a new era will begin in the industrial history of Ulster."—[OFFICIAL REPORT, 5th May, 1955; Vol. 540, c. 2029.]
This hope has not yet been fulfilled. That is not due to any inherent faults of the Development Council, which has done a pretty good job in conjunction with the Government of Northern Ireland in attracting new industries, particularly from the United States, but rather to difficulties which could hardly have been foreseen at the time the Council was set up. I refer particularly to the ebbing of industrial development in Great Britain and more particularly to the increasingly severe restriction of credit by the high interest rates prevailing here which are naturally reflected in Northern Ireland; and, finally, to the mood of uncertainty and sense of crisis created in Northern Ireland by some of the actions taken here by the Government.
It is true that the credit squeeze has not been applied in Northern Ireland with the same severity as here, but the fact remains that overdraft rates are still higher in Northern Ireland than they are across the border in the Republic of Eire. Surely that is an anomalous situation. Banks in Northern Ireland, mostly subsidiaries of the "Big Five" banks, are too cautious. Surely they might take a little more risk. But something more is needed than simply making bank borrowing easier, particularly as many private firms in Northern Ireland are reluctant or unwilling to contemplate new ventures.
In this connection I have a suggestion to make. It is not new; it has been made before, but it has recently come into prominence through the publication by two economists on the staff of Queen's University, Belfast—Professor K. S. Isles and Mr. Norman Cuthbert—of an


Economic Survey of North Ireland, undertaken at the request of the Government of Northern Ireland.
My suggestion is the project of a Government-sponsored Industrial Finance Corporation; I mean, sponsored by the Imperial Government here, either directly or by putting capital at the disposal of the Government of Northern Ireland. It is envisaged that the company would have a capital somewhere in the region of £2 million or £3 million, and that it should undertake the following duties. First, it would provide new firms with capital out of its own resources or help them to obtain capital from the public by forming themselves into public companies and issuing shares. Secondly, it would provide existing firms with additional capital or help them to raise it from the public, in order to increase their scale of operations on a sound basis if, owing to the rise in the price level or because they have relied mainly on bank overdrafts to finance development, they have become under-capitalised.
Thirdly, it would provide cash resources for enabling proprietors to meet death duties, and here I would remind the House that there are more small family businesses in Northern Ireland than in any other part of the Commonwealth. Fourthly, it would advise upon and arrange for the financing of reconstruction and amalgamation, particularly of private companies wishing to become public companies, in order to be able to increase the size of their undertakings through public issues.
The board of directors of this company would consist predominantly not of bankers but of business men who would, so far as possible, be free from all Government interference, even if the Government should become the majority shareholder. Similar corporations have been set up with success in other parts of the Commonwealth, such as South Africa and Canada, and also in Eire. The Industrial Credit Company in Eire has achieved considerable success by acting as an intermediary between firms wanting capital and the investing public.
The central Government have a particular responsibility towards Northern Ireland, including matters relating to its production and productivity, because Northern Ireland, despite all the measures

that have been taken, still remains a depressed area, perhaps the last in the United Kingdom. I am sure my right hon. Friend the Home Secretary is aware of this, just as much as he is of our peculiar constitutional position, although some of us in Ulster sometimes wish he and his colleagues in the Cabinet would give us more positive signs of that awareness.
It is in that spirit and in all seriousness that I commend this project to him when he considers the detail of this Session's legislative programme. I would beg him, the Prime Minister, and all members of Her Majesty's Government not to forget us in the loyal, hard-working and, what I am convinced is at bottom, fundamentally viable part of the United Kingdom, Northern Ireland.

8.29 p.m.

Mr. Arthur Holt: I have some sympathy with the hon. Member for Belfast, North (Mr. Hyde) who complained that the Government had left out from the Queen's Speech any mention of Northern Ireland. There are quite a number of other things also left out of the Queen's Speech, and because of some particular matters which have been left out in regard to the economic problems which are facing us today my party has put the following Amendment on the Order Paper:
But, while welcoming the belated recognition of the paramount need to maintain the value of money and restrain inflation, humbly regret that there is nothing in the Gracious Speech which can give the nation confidence that the Government have a policy for industry which will promote industrial peace and encourage owners, management and workers to recognise their common interest in increased productivity.
The debate has been rather strange in some respects. We have had one or two powerful speeches from hon. Members on the back benches opposite and one wonders why they are making those speeches now. I have sat here for six years and often while I have been sitting here I have heard remarks thrown across from the other side of the Chamber to many of my personal friends, if not my political friends, on this side to the effect that we had six years of Socialist misrule. Whether that be true or not, I cannot think in regard to inflation that


anything can have been quite so bad as the six years of Conservative misrule we have had on this problem.
The hon. Member for Torquay (Mr. F. M. Bennett) has now left the Chamber, but I cannot forbear to make a remark about his speech. He started with some excellent sentiments and, I believe, a correct analysis of the then situation by Sir Stafford Cripps. The hon. Member appeared entirely to accept the premise of Sir Stafford Cripps. One would have thought that when the Conservatives got into office in 1951 they would have acted on that premise, but, although various speeches have been made from time to time about the harm that inflation does and although some attempts—a little half-hearted—have been made from time to time, they have never really got down to curing inflation because they have never really had the determination to do so.
One does not only want determination. The hon. Member for Esher (Sir W. Robson Brown), in a very forceful speech, was full of determination, but that is not everything; one must have the right methods. I think the situation was well presented to the House by the right hon. Gentleman who is now Paymaster-General in a speech, the date of which I cannot remember, in an economic debate about a year ago, at the end of which he outlined the dilemma of the Government. He said we are engaged on a great experiment in endeavouring to run a Welfare State, a free economy and full employment without inflation, and so far, we must admit, we have not been able to do all those things.
What we must be quite clear about is that the Government are now saying that what we have been doing for the last six years is really all wrong. We cannot let this inflation go on any longer because, as has been said from the Government benches, if inflation goes on it will bring unemployment and, of course, full employment was one of the things they wanted to keep. It was because they were mindful of the need for full employment that we must stop inflation.
I should hate to read extracts from speeches which I and members of my party have made on this subject, but this is the point we have made times out of number—that inflation was the real evil

and unless we stopped it employment, the Welfare State and even freedom itself were in danger. What I am concerned about is that the Government so far have tackled the problem from only one aspect. It was particularly disconcerting to hear the right hon. Member for Blackpool, North (Sir T. Low)—whom I always looked upon when at the Board of Trade as one of the more liberal-minded members of the Government—talking about what was to be done now. He referred to a meeting of the Institute of Directors, which was addressed by Lord Chandos and said that the great lord had had a thought and we must all know about it. This is not something new; it is not now that we should start to think about what happens when inflation stops. Some thought should have been going on with the whole idea of stopping inflation. It may be too late if we merely stop inflation, are thrown into great unemployment and then ask, what do we do about it?
It is our concern that the Government have not explained or shown that they really have a policy for expansion, for increasing production, for improving productivity where it can be improved or expanding trade whilst carrying out this severe monetary policy which, we agree, is necessary to control the supply of money and to stop financing further inflation. It is to these and other remedies that I wish to address myself for a few minutes.
In passing, I should like to say that while I followed the opening speech of the Leader of the Opposition with very great interest and attention, as I think all the House does when he talks as an economist, when he started later to produce the remedies, it appeared to me that he had then donned his mantle as Leader of the Socialist Party and somewhere in the background was the latent economist. In the remedies he offered to the House, I am afraid I cannot go along with him.

Mr. Ellis Smith: On what proposals?

Mr. Holt: I am coming to them. The Paymaster-General then rather twitted him for his suggestion about selective controls. These are some of the things he suggested with which I do not agree. The Paymaster-General is not on very good ground himself because what is C.I.C. if it is not control? What, indeed, are the curbs on hire purchase?

Mr. Walter Monslow: rose—

Mr. Holt: I am sorry I cannot give way, but I have had to wait a long time to speak. What, indeed, are the instructions to the bankers other than selective controls? What, indeed, is Purchase Tax other than a selective control? The Liberal Party disagree on these matters with both the Paymaster-General and the Leader of the Opposition, and we are finding that an increasingly large number of people in the country are agreeing with us.
The root cause of our problem, I think, arises from the continuation of the restrictionist policies pursued both before the war and since. They have been made more severe and damaging in their effect by the continuation of post-war inflation. In effect, the kind of policies that are being pursued may give advantage to some vested interests in the community, but they certainly act to the disadvantage of other people and are never conceived as policies for the benefit of the community as a whole.
I think that it springs from the change of emphasis which has taken place in the House over thirty years, a change of emphasis which understandably came about as a result of unemployment in the 'twenties and 'thirties when people said, "There is all this talk about looking after the consumer; we must take notice of the producer because, of course, if the producer has no wage he is not even a consumer." I suggest that this has led us too far the other way, and that what we want now is a change of emphasis in policies which will pay more attention to the needs of the consumer and less attention to the demands of the producer.
I am very glad that in their suggestions about cutting taxation and taking a lot of restrictions off trade the Liberal Party now have the support of a very well-known Professor, Professor Colin Clark, in a recent pamphlet which he produced called "The Cost of Living". In it he said that high taxation is sometimes defended on the ground that it weakens monopolies, but he goes on to point out that monopolies have done very well out of high taxation and that the people who have suffered have been private business men, small business men, who get their capital from ploughing back their profits.

These are the people who have suffered under high taxation. The pamphlet continues:
The experiment of high taxation combined with protectionism has been a complete, utter, howling disaster. We urgently need a Government which will have the courage to admit this unpleasant truth and not just tinker with things as they are now, but take steps to dismantle the whole experiment with all speed.
I do not wish to follow the argument into detail. No doubt hon. Members can get the pamphlet if they wish and can read it and understand the case far better than I can explain it. Briefly, however, this has for long been the policy of the Liberal Party. Not until taxation is reduced and the channels of trade released both at home and abroad, with free and fair trade both at home and abroad, shall we stimulate society and reduce the cost of production, which is our problem. It is one thing to curtail demand and to refuse to finance inflation, as the Government have said, but that alone will not solve our problem. We need at the same time to go to the root of the problem and both release initiative to enable people to develop, by reducing taxation, and clear the channels of trade so that we may have a proper use of the resources of the nation and so that people who are enterprising can start new businesses and can readily find markets without hindrance by Government.
In no way do I wish to avoid the responsibility of explaining our views on cutting taxation. I will briefly say under what main headings we should like to see it done. I do not see how anyone can be satisfied with a system of defence which costs us £1,500 million a year and which even the Minister of Defence says is nevertheless inadequate. We have been led to expect some further cuts in that expenditure in the coming year. I welcome the initiative which has recently been taken, again after very long delay, more closely to co-ordinate the defence activities of Europe and the Atlantic Alliance, and I hope that further economies will arise from that, but certainly substantial cuts can be made in defence expenditure without any detriment to our security.
Further, as I will outline in a moment, as the Free Trade Area develops and as tariffs are reduced there is no reason why agricultural subsidies should remain at their present high figure. There has always been a case for a considerable


support of agriculture while a large part of British manufacturing industries was given tariff protection of 30, 40 and even 50 per cent. Although the vast majority of it is at a lower figure of about 25 per cent., even that is substantial. While that has persisted, agriculturists have always had a case; they have said that as they have very little tariff protection they are entitled to something else in its place. As we enter the Free Trade Area the case for subsidies will diminish year by year and a considerable saving is to be obtained there. I agree that it is not an immediate saving, although there could be an immediate saving on one or two elements of the subsidies.
Thirdly, cuts may be obtained in taxation by not having to collect so much to finance local government activities and the nationalised industries. Far too much of the nationalised industries' finance has been obtained other than from the customer. I am really getting out of patience, particularly with hon. Members opposite who complain about the price of coal. I have been saying for several years now that coal is still too cheap here, and hat until the price is more in line with the prices at which we have to buy it from outside we shall not get that economic use of it that we all desire. While a thing is cheap, people will waste it.
I certainly do not want to pay more for house coal than I do now, but I must admit that I am wasting it every day, and polluting the atmosphere into the bargain. I have done my best, in a small way to reduce consumption, but no inducement in that direction will act so well as an increase in price. I and the Liberal Party would like to see the importation of coal freed so that the Coal Board no longer had to continue carrying a subsidy, bringing in American coal at a high price and—of all the ridiculous things that have ever been done in the industry—sell it at the same price as coal coming from our pits. It is economic nonsense, and should be stopped as soon as possible. If that were done, there would be no reason at all why the Coal Board should not make a handsome profit, that handsome profit should be ploughed back into the industry, in which case there would be no need for the industry to come to the taxpayer for its capital.
I would seriously ask the House to consider with fresh minds the problem of free

trade. To many people, this is a battle fought over long ago. It was at one time won by the Liberals, and Disraeli said that the subject was dead and buried, but it was resurrected and we became a protectionist country once more, particularly in the 'thirties, although it started in the 'twenties.
It is now being put forward that there are great benefits in removing our tariff barriers against some 15 European countries. Is this a good thing? If it is, why limit the benefit? Why should we not give these tariff reductions to the other countries with whom we trade? Our trade with the fifteen countries in Europe is only 20 per cent. of our total, but it is apparently considered a great thing and something of great benefit to remove those tariffs. Why not remove them for the rest of the world with whom we do the other 80 per cent. of our trade?
A student of the subject may reply that we already have done so for the Commonwealth, with which we do 50 per cent. of our trade. I agree that, with few exceptions, the Commonwealth has a free and open market in the United Kingdom, but that still leaves 30 per cent. of our trade which is restricted by tariffs and quotas. If it is a good thing for us to enter this Free Trade Area in Europe, it must be an even better thing to extend it throughout the rest of the world.
That can be done by one simple action—rather, it can be done by doing nothing at all. It is suggested by this Government that when the Free Trade Area comes into being they will ask the nations of G.A.T.T., and those nations with whom we have most-favoured-nation clauses, for a waiver. The Government will say, "We are lowering our tariffs with European countries. Under our most-favoured-nation clauses we really should do the same with you. We are going to ask for a waiver." That is what the Government are proposing they should do. I suggest that they should not ask that. As our tariffs go down as we enter the Free Trade Area, so, bit by bit—let this be done steadily, for we do not want any violent upset overnight—the tariffs with other countries outside Europe will also be lowered, and if we can get a quid pro quo I am all for that as well, but let us have half a loaf if we cannot have all of it.
We should follow up this policy and back it with a real attack on restrictive


practices at home. We in the Liberal Party regret particularly that the Government did not make price fixing agreements illegal when the Restrictive Trade Practices Act went through this House. My hon. Friend the Leader of the Liberal Party said in our last debate on economic affairs that there is now competition in this country on everything except price. My information about those firms who are affected by the Restrictive Trade Practices Act is that all they are doing is to make legal alterations in their agreements in order that they will not be caught by the Act, but they are making no substantial alterations in their practices in industry.
If we really want to get the cost of living down, we must pursue a policy of attacking restrictive practices, and it must go hand in hand with the policy of refusing to finance inflation. But merely to refuse to finance inflation without energetic policies to cut taxation and to bring in free and fair trade is bound to fail. I hope that before it is too late the Government will adopt these additional policies.

8.52 p.m.

Mr. Alfred Robens: We have reached nearly the end of a very long debate upon the Gracious Speech, and during these past few days we have dealt with very important matters, some of which were contained in the Speech and some of which were not in the Speech at all.
Today my right hon. Friend the Leader of the Opposition moved the Amendment in his name and in the names of some of his hon. Friends, and I think the House will congratulate both my right hon. Friend and the Paymaster-General, because I think we all listened to two first-class economists putting their arguments in such a way that even laymen like myself could follow them fairly easily.
If one were to say that one could not accept what the Paymaster-General said or the conclusions that he drew, that would only be expected from this side of the House. But I must say that with the present financial crisis, with the increase in the Bank Rate to 7 per cent. and all that it involves, the credit squeeze, and the cuts in investment which are euphemistically described by the Chancellor of the Exchequer not as cuts but as

mere phasing, one would have thought that the Gracious Speech would have dealt in volume and certainly in great detail with measures which were designed to increase our production and productivity. Hence the Amendment on the Order Paper.
Certainly it seems to us that the real method by which this country is to make its way out of the recurring economic crises is to increase production, particularly to increase productivity, to push up our exports, to stop the rise in the cost of living, and to bring some stability to the economy; in other words, to bring this country's economic affairs into such a pattern that, as the Leader of the House once promised us, we should double the standard of living within twenty-five years.
In the Gracious Speech, these matters are conspicuous by their absence, and one would have thought, because of the measures the Government have taken, particularly for cuts in investment, that it was fairly obvious that industry would need to work much more intensively, and work the existing machinery already installed more intensively, than ever before. If the cut in investment is to lead to cuts in new machinery in industry, the automative processes and so on, it must follow that the existing facilities we have in our workshops, mines and factories will have to be worked in the most intensive way possible.
This means the abolition or avoidance of all restrictive practices, from whichever quarter they come. It means a really co-operative effort on the part of workers and management. It means, in fact, the more efficient use of the resources we now have if we are no longer to have the sort of investment that was at first projected. If we are to make these changes in industry and get rid of restrictive practices, if we are to get real co-operation between management and men, we must create the atmosphere in industry in which this sort of thing can happen, and it cannot possibly happen in an atmosphere of mistrust and industrial strife.
I believe it is quite impossible to secure the changes in working methods which in this era we urgently need in industry if there are strikes, "go slows" or indeed any interruption at all in industrial peace. What is it that causes unrest in industry? Workers do not strike because they like it.


They do not quarrel with managements without some reason. The real reason disputes take place is that the workers are suffering under a sense of injustice. It does not matter whether that injustice is concerned with conditions of work, with wages or with the facilities that are given to enable the workers to do their jobs. If the worker feels a sense of injustice, from whatever cause it may be, inevitably troubles are bound to follow.
The Queen's Speech contained nothing that was sound and constructive to provide the right climate in which increased production and productivity could take place, and it did nothing to remove the sense of injustice which the workers in industry at present feel very keenly.
The Government have made two great mistakes. The first mistake was psychological, because for the past few weeks and no one can deny this—an atmosphere has been worked up throughout this country on the part of the Government and their supporters that the unions were to blame for the present financial problems.
In my own constituency, I have a Conservative opponent, and he was directly reported in the local Press as saying that, if it were not for the unions, there would have been no need to increase the Bank Rate. I admit that he is only a minnow in the large political stream, Nevertheless, he has picked that up from others who are not minnows but leaders of their party and members of the Government. I think it is a very bad thing and a tremendous mistake, because already there has been created among the workers the wrong sort of climate for the changes to which I have referred to take place.
This campaign went on, and I suppose it reached its climax with the exhibitionist bell-ringing of Lord Hailsham, the Lord President of the Council. I suppose that of all the men in this country in this last few weeks, his utterances in relation to the trade unions and the workers have done more damage than anything else I could think of.
I do not make these remarks about Lord Hailsham because I want the Prime Minister to dispense with his services. Far be it from me to suggest these things. I like Lord Hailsham in his present position as a Cabinet Minister and Chairman of the Conservative Party. He is

one of our greatest electoral assets. Whatever might have been the case before, there certainly will not now be 3 million trade unionists voting for the Tories at the next General Election. I do not suggest that one should do anything drastic about Lord Hailsham. Let him plunge about at all the by-elections; the more he goes to, and the more times he goes, the better for us. Let him air his views on all sorts of things. Let him go on attacking the party and the leaders of the party as much as he likes. We have no complaint about that.
One thing, however, I say most urgently to the Chancellor of the Exchequer—and I would say it particularly to the Minister of Labour. The Government would be very wise to tell Lord Hailsham that, while he is free to talk about anything else he likes, he ought not to talk about things of which he knows nothing, things which are a most delicate and sensitive part of our economy, namely, the life of the workers of this country and the trade union movement. In these matters, he is plunging around and doing harm to the nation as a whole.
A few days ago, the Prime Minister, I think, uttered some rebuke to Lord Hailsham. When the right hon. Gentleman attended the Institute of Directors' Conference, he said something with which I entirely agree. The Prime Minister said:
We do not want civil war in this country. We have a lot of trouble to face in the world together. We had better not knock each other about.
That is plain common sense, and the sooner it is realised that the trade union movement not only has a contribution to make but is willing to make it if the right conditions are created, the sooner shall we have a chance of keeping our political battles where they belong, that is, in this House and on the hustings, but not in the workshops and factories where they can do so much damage.
The second mistake made by the Government after that initial error of creating this very bad climate in the country was, of course, the very firm declaration by the Chancellor of the Exchequer, which was explained in some degree by the Minister of Labour later, that whatever may arise from negotiation between the railway workers and the


British Transport Commission, the Government would make sure that there would be no additional money to meet it. That has been repeated, in a rather different form, by the Paymaster-General this afternoon.
This declaration by the Government seems to the trade union movement clearly to be a declaration that normal negotiation and arbitration are, at the moment, useless and that increased wages are only to be obtained on the basis of a trial of strength. Indeed, only last week, the Minister of Labour, apropos this matter, said that it would depend upon whether union funds ran out or the £ cracked first. I do not say that he said that as a challenge; he did not.

The Minister of Labour and National Service (Mr. Iain Macleod): I should very much like to make it quite clear, as I am sure the right hon. Gentleman knows, that I said it would be a tragedy if such a situation arose in which there was a trial of strength to see which would crack.

Mr. Robens: Yes; I was saying that the right hon. Gentleman did not say this as a challenge. But what he said other people have been saying also, in not quite the same way. People have been declaring, "Let us see whether union funds run out first". What the right hon. Gentleman was saying—I do not disagree with him at all—was that it would be a tragedy if such a situation arose. If he had allowed me to finish my sentence I should have made that clear.
Then, of course, the Government acted. The first thing they did was to take the poorest, or very nearly the poorest, paid workers in Government service—there are others on lower rates—and veto a decision of the Whitley Council. There has been a reply by the workers concerned instituting a ban on overtime, which is the only means they have of registering their attitude. This is now the sequence of events.
The first people to suffer by the new policy of the Chancellor and the Government are workers in the National Health Service. Their properly constituted machinery comes to a decision and the Government veto it. I shall come later to some of the reasons advanced by the Minister of Health. They then declare a ban on overtime. I emphasise

that because it is as well that the Minister of Labour, who, I am sure, understands this, should make it clear to his colleagues that it is not necessarily strikes that will emerge if this sort of thing continues and it is not necessarily those things which will run out the unons' funds.
We had our experience when we were in government. In the power stations, it does not cost much to move only a few engineers, but they can bring the whole industry to a stop. It is a shocking thing when it gets to the stage that the first reaction of a body of public servants is that they ban overtime. What will happen with the engineers, the miners and everybody else who is in a much stronger position?
This is a shocking atmosphere in which to start a new effort to bring Britain out of the present economic difficulties and to try to build up future prosperity. Indeed, it will not work—it cannot work. I hope that the Government will have the sense to look again at this policy and to modify it.
None of us will quarrel if the Minister of Labour or the Chancellor of the Exchequer urges upon the unions the necessity for wage restraint—that was done, and extracts have been quoted, by Sir Stafford Cripps; but together with urging wage restraint in the time of Sir Stafford Cripps, the Government themselves were adopting policies that enabled the trade union movement, with some success, to urge wage restraint.
The Government are not doing that. Whilst they urge wage restraint, what they have done for their own employees in the Health Service is not wage restraint. In the case of the railwaymen, for whom they have refused to provide any more money for wage increases, and in the case of the lower-paid workers in the Health Service, it is not wage restraint. It is a wage freeze. Never at any time during the period of the Labour Government was there a wage freeze. The Paymaster-General this afternoon said that there was no wage freeze, but I say that these two examples are in fact a wage freeze and not wage restraint. A wage freeze is bound to be resisted.
It is no use the Government saying that they are agreeable to wage increases where they are earned by increased productivity. That is not sufficient in itself, because there are literally millions of


workers whose work does not bring them into the type of job in which their efforts can be measured by productivity. As the Paymaster-General himself admitted this afternoon, it is not right that the whole of wage advances or rewards for service should go only to those workers who are in the productive enterprises.
My hon. Friend the Member for Bilston (Mr. R. Edwards) made this point in an excellent speech, in which he said that all workers—in fact, everybody—must share out of the common pool of the nation's total productivity. Therefore, it is a bad thing to say that only workers who are connected in some way with tasks in which there can be a measurement of their productivity will be entitled to wage advances, the inference suggesting that those whose productivity cannot be measured cannot get any advance at all.
The Government are not only making a colossal blunder in the way in which they are handling their labour relations—and the Minister of Labour will, I think, have a difficult time over the next few months—but certainly their policy is not altogether shared by some of the leading industrialists. The conference of the Institute of Directors was interesting for the number of constructive speeches that were made. I was interested, for example, in Sir Frederick Hooper's contribution, in which he said that
The measure of efficiency we should apply to ourselves is that increased profits should only stem from increased volume. That should be the heart and soul of our creed.
The Archbishop of Canterbury had said that a new spirit of approach was needed between those who were mainly concerned in industry—that is, between the bosses and the unions. Sir Frederick Hooper continued:
And this, gentlemen, is the annual conference of the Institute of Directors—the bosses. What are we going to do about it?
Then he went on to say some of the most sensible things about the way in which worker/management relations should be conducted that have ever been said by anybody in a single speech.
I return for a moment to the question of the health services, where the Government are the bosses. I want to say something later about the position of the Government where they are not the direct bosses, but where, as in the case of the railways, they have some influence on

wage decisions. These are the two sectors for which the Government are directly responsible. Although they have some responsibility for the private sector, they have not shown us how they will control the wage situation there. I noticed that today, as last week, Questions asked by the Leader of the Opposition about how the banks were to deal with advances when money was required for wages, were dodged. I hope that the Leader of the House will return to that subject and give us the answer to Questions which have been asked on two occasions and to which we have not yet had any reply.
To return to the workers in the health services, I think the Government have played a rather dirty trick on the staff side. At one time, the Whitley Council was made up of officials and representatives of the unions and associations, and when there was a breakdown in negotiations, the staff side, and the Council as a whole, could go, on agreed terms, to the Industrial Court. If one looks at the record of wage advances in that Whitley Council, one sees that the bulk were based upon decisions of the Industrial Court and not upon agreed decisions within the Council.
Then the Guillebaud Report came along, and it suggested that there should be other than officials on the management side. The Government accepted the proposal and put the representatives of the hospital boards and others—I will not read them out; they are all in the booklet dealing with the Whitley Council—all on the management side, leaving about nine unions and associations on the staff side.
As I understand it—perhaps this might be cleared up—the management side was told by the officials—it was the management side; not the staff side—that the Minister would probably veto any recommended advance. I understand that that was not disclosed to the staff side at that time. Consequently, while the management side, meeting in private, overruled, as it could, the five representatives of the Ministry, when the negotiations took place and those concerned voted as sides, they obviously came to an agreed recommendation, the staff side believing that, as always, the recommendation would be acceptable. It had no reason to believe otherwise.
What happens? The Minister of Health comes to the House and makes some explanation in which he says that there are two stages in this matter, the negotiation in the Whitley Council which produces the recommendation, and then the Minister must have the power of veto. Of course, if the staff side had known there was a difference on the management side there would not have been a recommendation. The matter could then probably have gone to the Industrial Court, and the Government would then have been faced with an Industrial Court decision. But that did not happen. The Government merely told the management side in advance that they would not pay any recommended increase. The staff side was led to believe that the Whitley Council was functioning normally and accepted in good faith the decision to recommend increases of 3 per cent. and 5 per cent. respectively. Then the Minister comes to this House and we have this scandalous and disgraceful affair in which the final step of arbitration was denied to these poorest paid workers in the land.
I do not want to make any capital out of the fact that the Government take the view that a 5 per cent. increase to those in receipt of salaries over £1,200 a year is not inflationary while a 3 per cent. increase to those who get less than £1,200 is. I know their argument is that those earning less than £1,200 got an increase of 3 per cent. some time ago, but there is still a difference of 2 per cent. lying around somewhere.
That is not the aspect that wish to go into, however. My point is that because of the disgraceful and underhand way in which this matter has been dealt with the Government have put the whole basis of Whitley Councils into serious jeopardy. There are nine functional councils in with the health services, and I cannot see any of the other eight trusting the management side again. What an impossible situation the management side has been put into in relation to the official side.
I now want to turn to the railways. Here again, we must have some more enlightenment tonight from the Leader of the House. I am sure that I express the views of everybody in this House when I say how much we regret the

terrible and tragic passing of Jim Campbell. Those of us who knew him knew a very fine gentleman. Just before his untimely death he wrote an article for the Railway Review, in which he asked some questions. I shall repeat those questions, and I hope that the Leader of the House may have within his brief some of the answers.
Jim Campbell had read what had taken place in the House, and he noted with great care the words of the Chancellor of the Exchequer and the Minister of Labour. He said:
What will happen when the Railway Staff Joint Council meets again? Are the B.T.C. in a position to give a reply based solely on the merits of the trade union submissions and unbiassed by outside pressure? Could anyone believe that they can?
He went on to say:
The destruction of faith in negotiation machinery would harm the nation every bit as much as the employers and the trade unions. It is only because the N.U.R. and the B.T.C., for example, could sit round a table and discuss their problems with mutual trust that we can point with pride to 31 years without an official strike. And heaven knows, we have gone through some critical negotiations during that time.
Is this record of thirty-one years of industrial peace—or of no official strikes—between the National Union of Railwaymen and the British Transport Commission to be continued, or will the action of the Government force, if not a strike, then working to rule, going slow and working to the handbook, which is about the slowest thing that can be done on a railway? It is done quite legitimately; the rules are laid down for the observance of the safety of the travelling public. What a stupid thing it would be for all this to happen.
I therefore beg the Government to look at this matter again. After all, they have a special responsibility to the British Transport Commission. It is not the Commission's fault that it is not at present able to enter into negotiations with the National Union of Railwaymen and the other railway unions and, if it is thought correct by both sides, to grant an increase. It is not the Commission's fault that it has not got the funds to grant an increase. The fault lies with the Government. It was this Government which hived off the most profitable part of transport; it was this Govenment which, month after month, delayed the advances in charges


which properly should have been made, and this Government which have been very largely responsible for the situation which the Commission is in today.
Now what does the Commission do? Has any advice been given to it? Does it go into negotiations and reach conclusions based on the merits of the case to be submitted by the railway unions concerned? And if on the merits of the case there is an advance to be granted, what part of its investment programme has it to cut? Do the Government advise it which part of its investment programme to cut or which additional services it is proposing to give should be postponed, or how many more branch lines and other services must he cut out?
I say that the Government are putting the British Transport Commission into an absurd and ridiculous position and that they are themselves residing in a coward's castle. It would be far better for the Government to tell the Commission that it must not give a penny than to say that they will give no more money other than the operating deficit of last year, and leave it to the Commission—that is what the Government said last week—to determine whether an increase is or is not an inflationary award. I think it a disgraceful position in which to put the trade union movement.
This afternoon the hon. Member for Kidderminster (Mr. Nabarro) intervened and said something about the mining industry. [HON. MEMBERS: "Where is he?" I will say something about the mining industry. I will say that in the years since the war, if the mining industry had demanded a minimum wage of £20 a week, it could have got it, and it could riot have been refused. Instead the miners still manage on a basic rate of £8 10s., with everything else they earn on the basis of bonuses. Has greater restraint been shown by any other body of men? And this at a time when we cannot get people into the mines; when the country is crying out for coal and when labour is so short. They have, in fact—

Mr. Geoffrey Hirst: What about the Hungarians?

Mr. Robens: —exercised the greatest restraint.
I should like to know from the Leader of the House whether the Government

have issued any instructions to those in control of the nationalised industries. The position in the mining industry is rather different from that in the B.T.C. But it cannot be the case—can it?—that one nationalised industry, because of the peculiar circumstances of the case, has this control, while other nationalised industries have not been advised about what they should do. Is it the case that the National Coal Board has been told that it must not grant wage increases in case they happen to be inflationary? Can we know what instructions, directions or advice has been given to the nationalised industries?
At the same time, the Leader of the House might be good enough to tell us just how he proposes to deal with the private sector, because on that side we have had no information at all. When the Leader of the House is answering some of these questions, he might answer another one. There was a previous occasion when the Government intervened in the private sector in a wage application. It happened last year in connection with a pay claim by the engineers. There was a strike and the matter went to arbitration. Finally the sum of 11s. was agreed on. Do the Government believe that the advice they tendered to the engineers and employers was good advice in view of what has happened as a result of it? Is that the sort of advice they are now giving in the private sector, or are they saying nothing this time and relying on the speeches made in the House and outside?
Finally, I wish to ask about production, because this is where I think the Chancellor has been at his brilliant best. Why have we done so badly over production? Have all the workers gone idle all of a sudden? What has happened? Have we bought less machinery? Have we closed down some factories? The answer is, of course, that production has fallen because of Government policy, and at the moment the Government are seeking to put the blame on any shoulders but their own. In April when we were discussing the Budget, the Chancellor was full of optimism. He then said:
How then should we summarise the prospects? After making full allowances for the factors I have mentioned, I see some grounds for cheerfulness. As I see it, the temperature of the economy has been brought down to a more normal level by our disinflationary policies in the last eighteen months. Resources


appear to be at least adequate to the demand on them. It is reasonable to hope for further substantial export gains. All this seems to be a basis not for standing still, but for going forward. Expansion must be the theme.
That contrasts a little with the speeches that he has been making recently about "rephasing", I think he calls it, the investment programme. To speak of "cuts" seems a little vulgar, really.
On the same day, the right hon. Gentleman was a prophet. He was looking ahead. He said:
…in the coming year, and indeed, beyond, I see no sign of stagnation in investment. In the public sector the plans designed for atomic energy, for coal, for transport, are large. The problem posed by investment plans for the basic and in part publicly-owned sector of the economy is not, in the main, whether we contemplate too little, but how we can manage to do so much. Yet we are right to do it. Ask any industrialist. Few would say that in this section we are guilty of being over-bold. We need more power, more steel, and more transport facilities."—

Hon. Members: Hear, hear.
Investment such as this is, indeed, vital to the economy of our country."—[OFFICIAL REPORT, 9th April, 1957; vol. 568, c. 982 and 981.]

Hon. Members: Hear, hear.
I am glad that Government supporters can cheer those remarks more than six months later. They are very different from what the right hon. Gentleman and his friends have been saying in last week's economic debate.
The real truth about the great economic problems is not something that happened last week or last year. We are suffering from the lack of policy on the part of the Government, their complete refusal to do anything to plan the economy and their belief that laissez faire is the way in which this country can meet the situation.
All I would say to the Government, in conclusion, is that today they have embarked upon the most dangerous path of their whole existence. The trade union movement and trade union leaders generally are anxious to see this country on top. For God's sake do not destroy what has taken half a century to build up in collective bargaining, in agreement and the good will of a great movement that has done so much for this country.

9.28 p.m.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): I think it is a tradition for the Leader of the House to conclude the debate on the Address in reply to the Gracious Speech. I warmly welcome the opportunity to deal with the Opposition's main Amendment, a brew which is not of the gravity we had expected; it was mild in draught and, thanks to the Leader of the Opposition, not even bitter in exposition. I shall attempt to follow the Opposition's example, but I shall also hope to point out some defects in their policy, although they have unsuccessfully attempted to point them out in our own.
Before I come to economics—we have really had quite a lot of economics from two of our greatest economists in the House, the first and second speakers, and I am sure we should like to pay a tribute to their contributions to our debates—I would say a word about the more human contents of the Gracious Speech. First, I would thank our three maidens, my hon. Friend the Member for Hornsey (Lady Gammans), my hon. and gallant Friend the Member for Dorset, North (Colonel R. H. Glyn) and my hon. Friend the Member for Edinburgh, South (Mr. M. Clark Hutchison) for their contributions during the debates. Time prevents my going into the merits of their speeches, but I hope that they will often be heard in the House of Commons. I hope I may refer to two remarriages, if I may so express it without offending the Establishment. One is by the hon. Member for Gloucester (Mr. Diamond) who sat with distinction in the Chair of this House, and the other is by the hon. and learned Member for Ipswich (Mr. Dingle Foot). I should like, in passing, to pay my tribute as Leader of the House to the robust qualities of his predecessor, Dick Stokes.
The new hon. and learned Member for Ipswich may be remembered for the occasion twenty years ago when he moved in this House an adaptation of Dunning's famous Motion that the powers of the Executive had increased, were increasing, and ought to be diminished. We can accordingly expect his support for the Bills which we propose for this Session, which are as follows: to diminish the volume of emergency powers relating to land, to lessen Whitehall control over local democracy, to do away with disciplinary powers and to amend Part II


of the Agriculture Act, and to augment the rights and liberties of the individual along the lines suggested by the Franks Report.
In this Session we are going to take great strides forward in carrying forward our philosophy of championing individual rights. This House, as I believe was evidenced in the debate on the Franks Committee Report, is the birthplace of ordered freedom. We all have a serious and special duty to support all these Measures and to see that the spirit of liberty is kept alive in the struggle and bustle of modern Britain.
The debate on economics ties together many of the other major themes in the Gracious Speech. It ties them together because without a sound and prosperous economy we cannot pursue the imaginative foreign policy upon which with the friendship of the free nations we are launched and, from that base of strength, to help save the peace of the world. Nor without a strong economic policy can we hope to proceed with that chapter of social policy to which reference is made in the Gracious Speech, namely, the provision for the old and disabled, for homeless children, and for prisoners. I and Her Majesty's Ministers look forward to the help of the House in passing forward this social legislation, which can only be paid for out of the proceeds of an expanding and strong economy.
In passing, I would say that there will be other matters which are not referred to in the Gracious Speech. Some will have to be dealt with by administration, but some by legislation and some matters, such as the contents of the Wolfenden Report, can only be proceeded with, in my opinion, after we have been able to take the opinion of the House and tried the effect of a debate before we make up our own minds.
We have before us, therefore, objectives upon which I think we can all unite, and these are the increase of our national wealth and a community of purpose of the whole country. I agree with the right hon. Member for Blyth (Mr. Robens) that these are essential prerequisites to the achievements of our ends, the keeping of peace, and the helping of those in need. Therefore, perhaps at the conclusion of this debate on the Address I may say that this debate takes place at one of the significant moments in man's history when science, according to the words of the

Gracious Speech, is advancing "into the unknown."
I have not time to speak of the measures which the Government are taking to further our technical advance, but I will say that our ideals must expand in the same proportion as our scientific advance and our statesmanship will have in the course of this Session to widen its frontiers if, together, we are to see the country through into happier times ahead.
I should like to reply shortly to the hon. Member for Cardiff, South-East (Mr. Callaghan) who spoke in the debate. He questioned whether our scientific advance was equal to the moment. I will only say this. I think our nuclear programme, especially in its civil aspects and in many aspects of its research, will make us not only a worthy ally in the case of trouble but a worthy opponent in the same circumstances.
The hon. Member made great play with our dilatoriness. I should like to refer to only three developments which are taking place or have been planned in the last eighteen months. First, 320 new technological building projects, estimated to cost over £60 million, have been approved. Eight colleges of advanced technology have been designated. Courses for those working in industry, with alternative periods of work and study, have been doubled and the number of full-time technical teachers has increased by 10 per cent. This is all based on the foundation which the right hon. Gentleman the Member for South Shields (Mr. Ede) and I created in the Education Act, 1944. I think that it is valuable, in reply to the hon. Gentleman who asked us questions on this subject, to show what progress has been made in this field.
Now I come to some of the more economic subjects to which the Amendment is directed. I would remind the House, first, that in each of the six years of Socialist administration Britain added less to her wealth in factories, power stations, houses, plant, machinery and ships than in the year before the war, namely, 1938. Under our administration, investment at home is well above pre-war; indeed, it has surged forward.

Mr. John Hynd: Twelve years after the war.

Mr. Butler: There is no need to talk about stagnation. Investment in the public sector in 1957–58 will be about £1,500 million as compared with £1,100 million in 1951. This is a comparable figure adjusted for price variation and it shows that in real terms public investment over this period has increased by no less than 37 per cent. Let me give some detailed figures. Investment in real terms in the fuel and power industries will have increased by two-thirds in 1957–58 compared with 1951. Investment in transport and communications has almost doubled over the period in question. I will give the figures.
When we assumed office, in 1951, the figures for fuel and power investment were £270 million, and in 1957–58 they will be £450 million. For transport and communications, the equivalent figures are £165 million in 1951 and £320 million in 1957–58. The scale of private investment has shown an equally large increase over the period 1951 to 1957 and is still at a very high level. All this investment is bearing, and will bear, fruit.
As for our overseas investment, which is running at over 1 per cent. of our gross national product, it is more than that of any other country in the European community at the present time. So much for the ridiculous charge that we are ravaging the seed corn. It is, however, only responsible to add that investment expenditure, however essential it may be, cannot be permitted to outrun available savings without aggravating inflation.
Before I come to the attitude that we have felt bound to adopt in the face of our present economic difficulties, I must ask the Opposition how they justify their own irresponsible policies. Our trade with the world, our standards of life, our savings for the future and our provision for the old could not be long maintained and honoured in the conditions of chronic inflation which the policies of right hon. Gentlemen opposite would undoubtedly bring about.
While I was away I was able to listen to the right hon. Gentleman the Leader of the Opposition on the air as well as to read him in "Industry and Society". Not only do hon. Gentlemen opposite propose to subject the steel industry and the road transport industry, with their long and successful record of industrial relations, to unnecessary and widespread

dislocation, but what contribution do they imagine that they will make to productivity or better industrial relations with Labour's policy on future public ownership, "Industry and Society", a copy of which I have in my hand?
How can they expect the vast range of British industry to settle down single-mindedly to increase productivity when the reward for success and the penalty for failure alike consists in being cowed, confused and clipped by the Labour Party? If a firm is not doing well, what do we read of the intentions of the Labour Party on pages 56 and 57 of this document? The firm is told, "You are failing the nation and we shall take you over". If a firm is doing well they say, "The community must acquire a stake in the fruits of your enterprise. We must take over your shares". In other words, they do a take-over.
I wonder whether hon. Members opposite have ever counted the total cost of the proposals with which they apparently hope to bribe and drug the electorate. As far as I could follow the marathon speech of the hon. and learned Member for Kettering (Mr. Mitchison) yesterday, it appears that we shall have to take into account the interest charge on the capital sum of taking over a large proportion of the 5½ million municipalised council houses. We shall have to account for the abolition of the National Health Service charges. We shall have to pay the services compensation for nationalisation and take-over shares.
According to a remark of the Leader of the Opposition, his view in 1951 was that we should restore the food subsidies. I should like to ask him whether that is his view today. [HON. MEMBERS: "Answer."] I did not expect an answer.
I should like to ask the hon. Member for Coventry, East (Mr. Crossman) what will be the cost of the long-term pensions scheme envisaged at the Labour Party Conference at Brighton. When I look at this prospectus of the Opposition with the cost which is involved—I think it is very good for the country to remember these things—I am reminded of the words of that fine comedian of the Windmill, Mr. John Tilley, who in one of his famous sketches was reading out the auditors' report at a company meeting. The auditors' report, on the prospectus of


right hon. Gentlemen opposite, runs as follows:
We certify that everything in the accompanying balance sheet, with the exception of the figures, appears to be correct; and the business of the company, if any, appears to be on the incline.
We cannot afford the extravagances of the Socialist programme. We must state quite simply that the sooner their policy comes back to what it was as expressed by the right hon. Gentleman the Leader of the Opposition in his own 1951 Budget speech the better. I quote his own words. He said that there must be no
…increase in wages and salaries beyond what is justified by the growth of productivity…"—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 831.]
That is sense, and that is precisely the policy that my right hon. Friend the Chancellor of the Exchequer is supporting.
The right hon. Gentleman the Member for Blyth asked me about production. I will try to give him the latest and most up-to-date assessment of production that I can. It so happens that the average production in the September quarter appears to have been the highest ever. It is about 3 per cent. higher than in the corresponding period of 1956. That is the answer to him. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) says that we had a 15 per cent. production increase in a period of five years. That is exactly what I said when I made my speech about doubling the standard of living in twenty-five years. I said that if our production could increase by 3 per cent. per annum—which is 15 per cent. in five years—we could achieve that result. I am very gratified that he should confirm my impression.
Not only have we a good figure for September but we also have good indications for certain industries. Motor car manufactures are up by about 62 per cent., and the production of plastics and machine tools, hosiery, radios, television sets, and in the chemical industry, are all going up.
I now want to tell the House the problem with which my right hon. Friend the Chancellor of the Exchequer is dealing. The problem with which he is dealing is that in the first six months of 1957—and this is the national problem with which we have to deal—the increase in

production was approximately £180 million—about 2 per cent.—while wages and salaries were 6 per cent. up—about £300 million. That is a ratio of two to six. The ratio in 1956 was one of a 1 per cent. increase in production to a 9 per cent. increase in wages and salaries, and a nearly 4 per cent. increase on profit margins.
That is the problem with which we have to deal, and, in my opinion, my right hon. Friend had no alternative but to adopt the strict policy that he has adopted with the full approval of his colleagues in Her Majesty's Government. As is seen at present, and as is evidenced by the strength of sterling, he has had his first victory for sterling, for which we should all be thankful.
I can only say this from my own experience, that any Chancellor of the Exchequer dealing with an exchange crisis, whether it be of the type that I dealt with in 1951–52—which was of a different type, because that was a case of a bad balance of trade, and we had to cut imports—or a crisis such as this, where wages and salaries are frankly outrunning production and where profits are not up to the wages and salaries, can only deal with it by limiting the circulation of money, as my right hon. Friend has done.
I come to some of the other questions raised by the right hon. Member for Blyth. I would first reply to his reference to the White Paper of 1948, the Statement on Personal Incomes, Costs and Prices. There are one or more extracts in this that I should like to bring to the attention of right hon. Gentlemen opposite. In paragraph 5, it is said:
It is essential, therefore, that there should be no further general increase in the level of personal incomes without at least a corresponding increase in the volume of production.
It goes on to make clear that unless we follow that policy it will hurt our exports, That is precisely the policy that we are following today.
The only difference between our policy and that of right hon. and hon. Gentlemen opposite is that at that time, when the matter was discussed on 12th February, 1948, Sir Anthony Eden, who was then in charge of our side, said that if the White Paper was not aimed only at one section, be it wages, salaries or


profits, it would have the support of the House and the nation. There was no vote of censure, there was no Division and the Opposition supported the Government. In face of our national difficulties today, the Opposition should not just pay lip-service to the need for joint collaboration in dealing with these problems but should copy our example on that occasion.
The right hon. Gentleman made reference to one of the leaders of our national life, namely, Mr. Jim Campbell who, together with Mr. Hollywood, was, to our great regret, killed in an accident in a far-off country, and I immediately take up the right hon. Gentleman's reference to these leaders of the trade union movement and express our own sympathy with their relatives in this great loss. [HON. MEMBERS: "Hear, hear."] I do not want to go on with that because I want to say that Mr. Campbell was a respected figure in the trade union movement. We respect his words, and it is no part of Government policy to seek to destroy the industrial relations or the collective bargaining which he did so much to foster. Nor do we intend to destroy the arbitration machinery. With my experience, having been for some long time Parliamentary Secretary and for a very short time Minister of Labour, and as a member of Her Majesty's Government, I would not myself support any such policy.
The case of the Health Service employees has been raised by the right hon. Gentleman and it would be wrong for me to allow the debate to close without referring to it. The Ministers in question—namely, the Secretary of State for Scotland and the Minister of Health—were acting in accordance with their statutory duty in a case where the Government are in effect, although not in form, the employer, because all the money for the wages in question comes direct from the Exchequer—that is, from the taxpayers' pocket.
I here take up a remark made by the Leader of the Opposition—"the man who decides whether to pay." The man who decides whether to pay in this question is the Chancellor of the Exchequer. It may be unfortunate that there is this confusion, arising from the right hon. Gentleman's reference to the Guillebaud Report,

on the subject of the management side and the official side, but what is absolutely certain is that there was absolute rectitude on the part of my right hon. Friend the Minister of Health. His official representatives were instructed from the start to oppose the grant of this wage award and, what is equally clear, he and his right hon. Friend the Secretary of State for Scotland were acting in accordance with the policy announced by the Chancellor of the Exchequer on 29th October, namely, that where the Government are themselves the employer we must seek to follow policies similar to those which we urge on others. It is our intention to adhere to that policy, whatever opposition and whatever clamour we may meet.
The right hon. Gentleman talks about the private sector. I should have thought, looking at the effect on the Stock Exchange, looking at the very stiff Bank Rate, at the credit squeeze to which the private sector is being submitted at the present time, and at the relationship of profits to wages in the figures which I gave, the private sector is certainly suffering a sufficient squeeze from the Chancellor of the Exchequer at the present time. In answer to the Leader of the Opposition, I am satisfied that the policy is balanced as between the public and the private sector.
The position about the Transport Commission, in answer to the right hon. Gentleman, is not that there can be no question of wages agreements within the ambit of the railways. Of course, there can be wage negotiations, but what it is perfectly legitimate for the Government to do is to decide that they cannot make any more money available by subsidy to the Transport Commission, and to give them that warning ahead, so that the responsibility lies with them.
I will read one more extract from the White Paper of 1948, which says this:
…the Government have decided…that if…remuneration is increased in any class of employment, whether in private industry or under a public authority, there can be no presumption, whatever may have been the practice in the past, that the resulting costs will be taken into account in…
the various
…financial matters requiring Government action.
Taken with due regard to the different financial climate, price-fixing and so


forth, to which reference is made, that is the equivalent in the country's economy, as we are running it now, of the policy which I have stated.
I want to make it quite clear that we intend, whatever the difficulty, to carry forward that policy. What is at stake, in fact, is this, and this is a problem which arises before every Chancellor of the Exchequer, before every Minister of Labour and probably also before every Government. At one time or other, the economy is so expanded that one has to hold back, and then the time comes when production lags and one has to go forward. We are at a moment now when production is actually showing signs of improving, but when wage claims and demands upon the products of the economy exceed by far the increase in productivity. We have, therefore, no alternative but to adopt a stiff policy.
That stiff policy has already been effective for sterling, and my right hon. Friend the Prime Minister has indicated

that we do not propose that this policy should result in such deflationary effects as will bring about the difficulties to which the Leader of the Opposition referred. We are not pessimists, like the right hon. Gentleman. We believe that our record especially in the years 1953 and 1954, when we managed to balance the economy between production and demand, can be repeated again. If there is any one man who can repeat it, it is my right hon. Friend the Chancellor of the Exchequer.

The Government are stoutly behind him and behind the Minister of Labour in their dual policy of working with the trade unions and maintaining collective bargaining, and in seeing that our production exceeds the demands made upon it. That is our task, and to that end we dedicate ourselves tonight.

Question put, That those words be there added:—

The House divided: Ayes 260, Noes 313.

Division No. 2.]
AYES
[19.59 p.m.


Ainsley, J. W.
Darling, George (Hillsborough)
Henderson, Rt. Hn. A. (Rwly Regis)


Albu, A. H.
Davies, Harold (Leek)
Herbison, Miss M.


Allaun, Frank (Salford, E.)
Davies, Stephen (Merthyr)
Hewitson, Capt. M.


Allen, Arthur (Bosworth)
Deer, G.
Hobson, C. R. (Keighley)


Allen, Scholefield (Crewe)
Delargy, H. J.
Holman, P.


Anderson, Frank
Diamond, John
Holmes, Horace


Awbery, S. S.
Dodds, N. N.
Holt, A. F.


Bacon, Miss Alice
Donnelly, D. L.
Howell, Charles (Perry Barr)


Baird, J.
Dugdale, Rt. Hn. John (W. Brmwch)
Howell, Denis (All Saints)


Balfour, A.
Dye, S.
Hoy, J. H.


Bellenger, Rt. Hon. F. J.
Ede, Rt. Hon. J. C.
Hubbard, T. F.


Bence, C. R. (Dunbartonshire, E.)
Edelman, M.
Hughes, Cledwyn (Anglesey)


Bonn, Hn. Wedgwood (Bristol, S. E.)
Edwards, Rt. Hon. John (Brighouse)
Hughes, Emrys (S. Ayrshire)


Benson, G.
Edwards, Rt. Hon. Ness (Caerphilly)
Hughes, Hector (Aberdeen, N.)


Beswick, Frank
Edwards, Robert (Bilston)
Hunter, A. E.


Blackburn, F.
Edwards, W. J. (Stepney)
Hynd, H. (Accrington)


Blenkinsop, A.
Evans, Albert (Islington, S. W.)
Hynd, J. B. (Attercliffe)


Blyton, W. R.
Evans, Edward (Lowestoft)
Irvine, A. J. (Edge Hill)


Boardman, H.
Fernyhough, E.
Irving, Sydney (Dartford)


Bottomley, Rt. Hon. A. G.
Fienburgh, W.
Isaacs, Rt. Hon. G. A.


Bowles, F. G.
Finch, H. J.
Janner, B.


Boyd, T. C.
Fletcher, Erie
Jay, Rt. Hon. D. P. T.


Braddock, Mrs. Elizabeth
Foot, D. M.
Jeger, George (Goole)


Brockway, A.F.
Forman, J. C.
Jeger, Mrs. Lena (Holbn &amp; St. Pncs, S.)


Brockway, A. F. Broughton, Dr. A. D. D.
Fraser, Thomas (Hamilton)
Jones, Rt. Hon. A. Creeoh (Wakefield)


Brown, Thomas (Ince)
Gaitskell, Rt. Hon. H. T. N.
Jones, David (The Hartlepools)


Burke, W. A.
George, Lady Megan Lloyd (Car'then)
Jones, Elwyn (W. Ham, S.)


Burton, Miss F. E.
Gibson, C. W.
Jones, Jack (Rotherham)


Butler, Herbert (Hackney. C.)
Gooch, E. G.
Jones, J. Idwal (Wrexham)


Butler, Mrs. Joyce (Wood Green)
Greenwood, Anthony
Jones, T. W. (Merioneth)


Callaghan, L. J.
Grenfell, Rt. Hon. D. R.
Kenyon, C.


Castle, Mrs. B. A.
Grey, C. F.
Key, Rt. Hon. C. W.


Champion, A. J.
Griffiths, David (Rother Valley)
King, Dr. H. M.


Clunie, J.
Griffiths, Rt. Hon. James (Llanelly)
Lawson, G. M.


Coldrick, W.
Griffiths, William (Exchange)
Ledger, R. J.


Collick, P. H. (Birkenhead)
Grimond, J.
Lee, Frederick (Newton)


Collins, V. J. (Shoreditch &amp; Finsbury)
Hale, Leslie
Lee, Miss Jennie (Cannock)


Corbel, Mrs. Freda
Hall, Rt. Hn. Glenvil (Coins Valley)
Lever, Harold (Cheetham)


Cove, W. G.
Hamilton, W. W.
Lewis, Arthur


Craddock, George (Bradford, S.)
Hannan, W.
Lindgren, G. S.


Cronin, J. D.
Harrison, J. (Nottingham, N.)
Lipton, Marcus


Grossman, R. H. S.
Hastings, S.
Mahon, Dr. J. Dickson


Cullen, Mrs. A.
Hayman, F. H.
MacColl, J. E.


Dalton, Rt. Hon. H.
Healey, Denis
MacDermot, Niall




McGhee, H. G.
Peart, T. F.
Strauss, Rt. Hon. George (Vauxhall)


McGovern, J.
Pentland, N.
Stross, Dr. Barnett (Stoke-on-Trent, C.)


McInnes, J.
Plummer, Sir Leslie
Summerskill, Rt. Hon. E.


McKay, John (Wallsend)
Popplewell, E.
Swingler, S. T.


McLeavy, Frank
Prentice, R. E.
Sylvester, G. O.


MacMillan, M. K. (Western Isles)
Price, J. T. (Westhoughton)
Taylor, Bernard (Mansfield)


MacPherson, Malcolm (Stirling)
Price, Philips (Gloucestershire, W.)
Taylor, John (West Lothian)


Mahon, Simon
Probert, A. R.
Thomas, George (Cardiff)


Mainwaring, W. H.
Prootor, W. T.
Thomas, Iorwerth (Rhondda, W.)


Mallalieu, E. L. (Brigg)
Pryde, D. J.
Thornton, E.


Mallalieu, J. P. W. (Huddersfd, E.)
Pursey, Cmdr. H.
Timmons, J.


Mann, Mrs. Jean
Randall, H. E.
Tomney, F.


Marquand, Rt. Hon. H. A.
Rankin, John
Ungoed-Thomas, Sir Lynn


Mason, Roy
Redhead, E. C.
Osborne, H. C.


Mayhew, C. P.
Reeves, J.
Viant, S. P.


Mellish, R. J.
Reid, William
Wade, D. W.


Messer, Sir F.
Rhodes, H.
Watkins, T. E.


Mikardo, Ian
Robens, Rt. Hon. A.
Weitzman, D.


Mitchison, G. R.
Roberts, Albert (Normanton)
Wells, Percy (Faversham)


Monslow, W.
Roberts, Goronwy (Caernarvon)
Wells, William (Walsall, N.)


Moody, A. S.
Robinson, Kenneth (St. Pancras, N.)
West, D. G.


Morris, Percy (Swansea, W.)
Rogers, George (Kensington, N.)
Wheeldon, W. E.


Morrison, Rt. Hn. Herbert (Lewlsim, S.)
Ross, William
White, Mrs. Eirene (E. Flint)


Mort, D. L.
Royle, C.
White, Henry (Derbyshire, N.E.)


Moss, R.
Shawcross, Rt. Hon. Sir Hartley
Wigg, George


Moyle, A.
Shinwell, Rt. Hon. E.
Wilcock, Group Capt. C. A. B.


Mulley, F. W.
Short, E. W.
Wilkins, W. A.


Neal, Harold (Bolsover)
Shurmer, P. L. E.
Willey, Frederick


Noel-Baker, Francis (Swindon)
Silverman, Julius (Aston)
Williams, David (Neath)


O'Brien, Sir Thomas
Silverman, Sydney (Nelson)
Williams, Rev. Llywelyn (Ab'tillery)


Oliver, G. H.
Simmons, C. J. (Brierley Hill)
Williams, Ronald (Wigan)


Oram, A. E.
Skeffington, A. M.
Williams, Rt. Hon. T. (Don Valley)


Orbach, M.
Slater, Mrs. H. (Stoke, N.)
Williams, W. R. (Openshaw)


Oswald, T.
Slater, J. (Sedgefield)
Willis, Eustace (Edinburgh, E.)


Owen, W. J.
Smith, Ellis (Stoke, S.)
Wilson, Rt. Hon. Harold (Huyton)


Padley, W. E.
Snow, J. W.
Winterbottom, Richard


Paget, R. T.
Soskice, Rt. Hon. Sir Frank
Woodburn, Rt. Hon. A.


Paling, Rt. Hon. W. (Dearne Valley)
Sparks, J. A.
Woof, R. E.


Paling, Will T. (Dewsbury)
Steele, T.
Yates, V. (Ladywood)


Palmer, A. M. F.
Stewart, Michael (Fulham)
Younger, Rt. Hon. K.


Pargiter, G. A.
Stonehouse, John
Zilliacus, K.


Parker, J.
Stones, W. (Consett)



Parkin, B. T.
Strachey, Rt. Hon. J.
TELLERS FOR THE AYES:


Paton, John

Mr. Bowden and Mr. Pearson.




NOES


Agnew, Sir Peter
Brooman-White, R. C.
Dugdale, Rt. Hn. Sir T. (Richmond)


Aitken, W. T.
Browne, J. Nixon (Craigton)
Duncan, Sir James


Allen, Arthur (Bosworth)
Bryan, P.
Duthie, W. S.


Alport, C. J. M.
Bullus, Wing Commander E. E.
Eccles, Rt. Hon. Sir David


Amery, Julian (Preston, N.)
Burden, F. F. A.
Eden, J. B. (Bournemouth, West)


Amory, Rt. Hn. Heathcoat (Tiverton)
Bulcher, Sir Herbert
Elliott, R. W. (N'castle upon Tyne, N.)


Anstruther-Gray, Major Sir William
Butler, Rt. Hn. R. A. (Saffron Walden)
Emmet, Hon. Mrs. Evelyn


Armstrong, C. W.
Campbell, Sir David
Errington, Sir Eric


Ashton, H.
Carr, Robert
Erroll, F. J.


Astor, Hon. J. J.
Cary, Sir Robert
Farey-Jones, F. W.


Atkins, H. E.
Channon, Sir Henry
Fell, A.


Baldock, Lt.-Cmdr. J. M.
Chichester-Clark, R.
Finlay, Graeme


Baldwin, A. E.
Churchill, Rt. Hon. Sir Winston
Fisher, Nigel


Balniel, Lord
Clarke, Brig. Terence (Portsmth, W.)
Fletcher-Cooke, C.


Barber, Anthony
Cole, Norman
Forrest, G.


Barlow, Sir John
Conant, Maj. Sir Roger
Fort, R.


Barter, John
Cooke, Robert
Foster, John


Baxter, Sir Beverley
Cooper, A. E.
Fraser, Hon. Hugh (Stone)


Beamish, Maj. Tufton
Cooper-Key, E. M.
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)


Bell, Philip (Bolton, E.)
Cordeaux, Lt.-Col. J. K.
Freeth, Denzil


Bell, Ronald (Bucks, S.)
Corfield, Capt. F. V.
Galbraith, Hon. T. G. D.


Bennett, F. M. (Torquay)
Craddock, Beresford (Spelthorne)
Gammans, Lady


Bennett, Dr. Reginald
Crosthwaite-Eyre, Col. O. E.
Garner-Evans, E. H.


Bevins, J. R. (Toxteth)
Crowder, Sir John (Finchley)
George, J. C. (Pollok)


Bidgood, J. C.
Crowder, Petre (Ruislip—Northwood)
Gibson-Watt, D.


Biggs-Davison, J. A.
Cunningham, Knox
Glover, D.


Birch, Rt. Hon. Nigel
Currie, G. B. H.
Glyn, Col. Richard H.


Bishop, F. P.
Dance, J. C. G.
Godber, J. B.


Black, C. W.
Davidson, Viscountess
Gomme-Duncan, Col. Sir Alan


Body, R. F.
D'Avigdor-Goldsmid, Sir Henry
Goodhart, Philip


Boothby, Sir Robert
Deedes, W. F.
Gough, C. F. H.


Bossom, Sir Alfred
Digby, Simon Wingfield
Gower, H. R.


Boyd-Carpenter, Rt. Hon. J. A.
Dodds-Parker, A. D.
Graham, Sir Fergus


Boyle, Sir Edward
Donaldson, Cmdr. C. E. McA.
Grant, W. (Woodside)


Brains, B. R.
Doughty, G. J. A.
Grant-Ferris, Wg Cdr. R. (Nantwich)


Braithwaite, Sir Albert (Harrow, W.)
Drayson, G. B.
Green, A.


Bromley-Davenport, Lt.-Col. W. H.
du Cann, E. D. L.
Gresham Cooke, R.


Brooke, Rt. Hon. Henry









Grimston, Hon. John (St. Albans)
Lindsay, Hon. James (Devon, N.)
Rawlinson, Peter


Grimston, Sir Robert (Westbury)
Lindsay, Martin (Solihull)
Redmayne, M.


Grosvenor, Lt.-Col. R. G.
Linstead, Sir H. N.
Rees-Davies, W. R.


Gurden, Harold
Llewellyn, D. T.
Remnant, Hon. P.


Hall, John (Wycombe)
Lloyd, Rt. Hon. G. (Sutton Coldfield)
Renton, D. L. M.


Hare, Rt. Hon. J. H.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Ridsdale, J. E.


Harris, Frederic (Croydon, N. W.)
Lloyd, Rt. Hon. Selwyn (Wirral)
Rippon, A. G. F.


Harris, Reader (Heston)
Low, Rt. Hon. Sir Toby
Roberts, Sir Peter (Heeley)


Harrison, A. B. C. (Maydon)
Lucas, Sir Jocelyn (Portsmouth, S.)
Robertson, Sir David


Harrison, Col. J. H. (Eye)
Lucas, P. B. (Brentford &amp; Chiswick)
Robinson, Sir Roland (Blackpool, S.)


Harvey, Sir Arthur (Macclesfd)
Lucas-Tooth, Sir Hugh
Robson Brown, Sir William


Harvey, Ian (Harrow, E.)
McAdden, S. J.
Rodgers, John (Sevenoaks)


Harvey, John (Walthamstow, E.)
Macdonald, Sir Peter
Roper, Sir Harold


Harvey-Watt, Sir George
McKibbin, Alan
Ropner, Col. Sir Leonard


Hay, John
Mackie, J. H. (Galloway)
Russell, R. S.


Heald, Rt. Hon. Sir Lionel
McLaughlin, Mrs. P.
Sandys, Rt. Hon. D.


Henderson, John (Cathcart)
Maclay, Rt. Hon. John
Schofield, Lt.-Col. W.


Henderson-Stewart, Sir James
Maclean, Sir Fitzroy (Lancaster)
Scott-Miller, Cmdr. R.


Hesketh, R. F.
McLean, Neil (Inverness)
Sharpies, R. C.


Hicks-Beach, Maj. W. W.
Macleod, Rt. Hn. Iain (Enfield, W.)
Shepherd, William


Hill, Rt. Hon. Charles (Luton)
MacLeod, John (Ross &amp; Cromarty)
Simon, J. E. S. (Middlesbrough, W.)


Hill, Mrs. E. (Wythenshawe)
Macmillan, Rt. Hn. Harold (Bromley)
Smyth, Brig. Sir John (Norwood)


Hill, John (S. Norfolk)
Macmillan, Maurice (Halifax)
Soames, Christopher


Hirst, Geoffrey
Macpherson, Mall (Dumfries)
Spearman, Sir Alexander


Hobson, John (Warwick &amp; Leam'gt'n)
Maitland, Cdr. J. F. W. (Horncastle)
Speir, R. M.


Holland-Martin, C. J.
Maitland, Hon. Patrick (Lanark)
Spence, H. R. (Aberdeen, W.)


Hone, Lord John
Manningham-Buller, Rt. Hn. Sir R.
Stanley, Capt. Hon. Richard


Hornby, R. P.
Markham, Major Sir Frank
Stevens, Geoffrey


Hornsby-Smith, Miss M. P.
Marlowe, A. A. H.
Steward, Harold (Stockport, S.)


Horobin, Sir Ian
Marples, Rt. Hon. A. E.
Steward, Sir William (Woolwich, W.)


Horsbrugh, Rt. Hon. Dame Florence
Marshall, Douglas
Stoddart-Scott, Col. Sir Malcolm


Howard, Gerald (Cambridgeshire)
Mathew, R.
Storey, S.


Howard, Hon. Greville (St. Ives)
Maude, Angus
Stuart, Rt. Hon. James (Moray)


Howard, John (Test)
Maudling, Rt. Hon. R.
Studholme, Sir Henry


Hughes Hallett, Vice-Admiral J.
Mawby, R. L.
Summers, Sir Spencer


Hughes-Young, M. H. C.
Maydon, Lt.-Comdr. S. L. C.
Sumner, W. D. (Orpington)


Hulbert, Sir Norman
Medlicott, Sir Frank
Taylor, Sir Charles (Eastbourne)


Hurd, A. R.
Milligan, Rt. Hon. W. R.
Taylor, William (Bradford, N.)


Hutchison, Michael Clark (E'b'gh, S.)
Molson, Rt. Hon. Hugh
Teeling, W.


Hutchison, Sir Ian Clark (E'b'gh, W.)
Moore, Sir Thomas
Temple, John M.


Hyde, Montgomery
Morrison, John (Salisbury)
Thomas, Leslie (Canterbury)


Hylton-Foster, Rt. Hon. Sir Harry
Mott-Radolyffe, Sir Charles
Thomas, P. J. M. (Conway)


Iremonger, T. L.
Nabarro, G. D. N.
Thompson, Kenneth (Walton)


Irvine Bryant Godman (Rye)
Nairn, D. L. S.
Thompson, Lt.-Cdr. R. (Croydon, S.)


Jenkins, Robert (Dulwich)
Heave, Airey
Thorneycroft, Rt. Hon. P.


Jennings, J. C. (Burton)
Nicholls, Harmer
Thornton-Kemsley, C. N.


Jennings, Sir Roland (Hallam)
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Tiley, A. (Bradford, W.)


Johnson, Dr. Donald (Carlisle)
Nugent, G. R. H.
Tilney, John (Wavertree)


Johnson, Eric (Blackleg)
O'Neill, Hn. Phelim (Co. Antrim, N.)
Turner, H. F. L.


Joynson-Hicks, Hon. Sir Lancelot
Ormsby-Gore, Rt. Hon. W. D.
Tweedsmuir, Lady


K Merry, D.
Orr, Capt. L. P. S.
Vane, W. M. F.


Keegan, D.
Orr-Ewing, Charles Ian (Hendon, N.)
Vaughan-Morgan, J. K.


Kerby, Capt. H. B.
Orr-Ewing, Sir Ian (Weston-S-Mare)
Vickers, Miss Joan


Kerr, Sir Hamilton
Osborne, C.
Wakefield, Sir Wavell (St. M'lebone)


Kershaw, J. A.
Page, R. G.
Walker-Smith, Rt. Hon. Derek


Kimball, M.
Pannell, N. A. (Kirkdale)
Wall, Major Patrick


Kirk, P. M.
Partridge, E.
Ward, Rt. Hon. G. R. (Worcester)


Lagden, G. W.
Peyton, J. W. W.
Ward, Dame Irene (Tynemouth)


Lambert, Hon. G.
Pickthorn, K. W. M.
Watkinson, Rt. Hon. Harold


Lambton, Viscount
Pike, Miss Mervyn
Webbe, Sir H.


Lancaster, Col. C. G.
Pilkington, Capt. R. A.
Whitelaw, W. S. I.


Langford-Holt, J. A.
Pitman, I. J.
Williams, Paul (Sunderland, S.)


Leather, E. H. C.
Pitt, Miss E. M.
Williams, R. Dudley (Exeter)


Leavey, J. A.
Pott, H. P.
Wills, G. (Bridgwater)


Leburn, W. G.
Powell, J. Enoch
Wood, Hon. R.


Legge-Bourke, Maj. E. A. H.
Price, David (Eastleigh)



Legh, Hon. Peter (Petersfield)
Price, Henry (Lewisham, W.)
TELLERS FOR THE NOES:


Lennox-Boyd, Rt. Hon. A. T.
Profumo, J. D.
Mr. Heath and Mr. Oakshott.

Main Question put and agreed to.

Resolved,
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom

of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

SUPPLY

Committee to consider of the Supply to be granted to Her Majesty, Tomorrow.—[Mr. Heath.]

WAYS AND MEANS

Committee to consider of the Ways and Means for raising the Supply to be granted to Her Majesty, Tomorrow.—[Mr. Heath.]

CONSOLIDATION, &c., BILLS

Lords Message [7th November] communicating the Resolution, That it is desirable that all Consolidation Bills (including Bills for consolidating Private Acts), Statute Law Revision Bills and Bills presented under the Consolidation of Enactments (Procedure) Act, 1949, in the present Session be referred to a Joint Committee of both Houses of Parliament, to be considered forthwith.—[Mr. Oakshott.]

Lords Message considered accordingly.

Resolved,
That this House doth concur with the Lords in the said Resolution.—[Mr. Oakshott.]

Message to the Lords to acquaint them therewith.

CAR PARKING (OUTER LONDON)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wills.]

10.13 p.m.

Sir Hugh Lucas-Tooth: I am grateful for this opportunity to raise the question of the parking of cars in the outer parts of London. It is a different question from that which is raised by the parking of cars in central London.
In the central area the difficulties caused by cars left in the streets are twofold: first, the congestion which they cause to traffic, and, second, the difficulty of those who wish to leave their own cars in finding any place to put them. The central area is one where many people work and relatively few live. In the outer areas, such as my constituency, the position is the reverse there are many residents and relatively few who work there.
My constituency is criss-crossed by four very large trunk roads, two of them being among the largest in the country. These, so to speak, form a skeleton on to which is attached a body of soft flesh in the shape of residential streets. But along these great roads there are places where considerable numbers of motor cars are attracted. They are magnets to the motorists who come there and seek to leave their cars for various reasons. The most obvious examples of these magnets are the tube stations. I am always receiving complaints about the trouble caused by cars parked in the neighbourhood of tube stations, particularly Golders Green, which will probably be familiar to many hon. Members.
Along quiet residential streets round Golders Green, on any day, one will find cars parked on both sides of the road, bumper to bumper, all day long. I get complaints from those who live in the houses that these cars are noisy; they cause smells; they cause dirt—more particularly in that their constant presence means that there is difficulty in cleaning the streets; they make access to houses difficult and sometimes almost impossible, and when one has cars parked on both sides of the street it may easily happen that there is difficulty about getting along


it, and parking by local residents becomes almost impossible. One lady told me that she could never get anything delivered by shops in the neighbourhood, because they said that it was impossible to rely upon being able to park vans for delivery purposes.
I took up this question a year ago with the then Joint Under-Secretary of State for the Home Office. Perhaps I may trouble the House with a passage from the reply which he sent me, which will throw some light on this problem. He said:
The first concern of the police is to facilitate the movement of traffic and for this purpose they must give most of their attention to the main roads, where the difficulties have recently been increased by road works. It is, of course, true that police action in the main roads causes drivers to leave their cars in the residential roads, where parking gives rise to little traffic difficulty, though the inconvenience and loss of amenity to residents is undeniable. The police have a great deal of sympathy with complaints of the kind you have received from your constituent and do what they can, within the limits of their resources, to mitigate the nuisance. They take action in any cases of obstruction or other offence brought to their notice…You will, however, appreciate that it is not within the power of the police to provide a solution to the parking problem. The need in Hendon, as elsewhere, is for increased off-street parking space, and that is a matter for the local authorities rather than for the police. As you say the need will be all the greater if fewer cars are able to park in Central London.
I have taken the trouble to read that to the House because it is important to see at the outset that this is not a police problem. I agree with the contents of the letter. There is nothing that the police can do about this. They can shift the cars around and occasionally prevent bad parking, but they cannot deal with the problem as a whole.
I can give another example of the sort of case that arises. There is a café on the Great North Way which is popular with lorry drivers. I understand that it is a good distance out and that they stop there frequently. They are quite rightly forbidden to park their lorries on the trunk road, and the result is that they turn into the neighbouring side streets. I am getting constant complaints from those who live in those side streets about the situation caused by the parking of large numbers of lorries along them. On this occasion I took the matter up with the local authority, which seemed to be the right course in view of what was said in the letter from the Home Office.

Again, perhaps I may be permitted to read an extract from the reply I received from the Town Clerk of Hendon on 15th July, 1957:
I took this matter up with the police and I have received a reply stating that the Commissioner of Police will be unable to support any form of waiting restrictions which would result in commercial vehicles being parked on a busy derestricted road. The Commissioner pointed out that both the minor roads concerned were of no through traffic importance and whilst the loss of amenities to residents in those roads was appreciated the police could not take action against the vehicles unless actual obstruction or any other infringement of the law was observed.
The position was simply to throw the matter hack on the police; there was no power in the local authority. Although the police will prosecute where there is a case for prosecution, this is not really a matter which can be dealt with effectively in that way. It is simply a case of innumerable minor annoyances which, added together, create an almost intolerable nuisance.
The third case in which my constituents in considerable numbers put a complaint to me relates to a cinema just off the main thoroughfare. None of the cases was in any way invited. They were all spontaneous and they illustrate what is a general trouble in this part of the world. A deputation came to see me about the parking of cars by the cinema patrons. I heard threats of direct violent action by those living in the houses nearby, that they would damage the cars and would puncture the tyres, if something was not done. Not unnaturally, nothing of the sort has occurred, but I mention it to show that there is a warm feeling on this matter.
I could give a number of instances of which that of a world-famous works in Cricklewood is an example. I have asked the town council to supply me with particulars of examples of which it is aware and it knows of 16 bad cases in the borough. There are other cases less bad, and they are growing in size. The problem is also growing. The more effective the policy of the Minister of Transport in limiting parking in the central area the greater will be the problem in the fringe areas. People coming to London will park their cars at Golders Green, Hendon, Finchley and other


stations round London and the annoyance to those who live in these areas will grow greater daily.
After further complaints regarding the Great North Way I had occasion to get in touch with the Town Clerk of Hendon. He replied to me that the Divisional Road Engineer had pointed out that this type of situation is not confined to the Borough of Hendon; but he stated that it was likely that the general position would be examined by the London and Home Counties Traffic Advisory Committee in the comparatively near future and that this particular case would be borne in mind. That letter was written on 10th October last and I wish to ask my hon. Friend whether these matters have been considered by the Advisory Committee and if so whether it has come to any conclusion and what advice it has given.
I am receiving, and no doubt I shall continue to receive, a steady stream of complaints in this connection. I think it right to make the point that in Central London we all complain about traffic conditions, but we know that it is a free-for-all in the sense that we ourselves in using the roads or parking our cars have as good a chance as anyone, and are creating difficulties for other people.
The position in outer London is otherwise. The people who complain to me are not causing the nuisance. They are not leaving their cars in these quiet roads. The people who come into the quiet roads are outsiders. Many of the individuals who live in these residential roads have paid charges for the making up of them, and they have a sense that they have actually paid for the roads on which the other vehicles are parked. There is a well-founded sense of unfairness.
The only obvious remedy is a sufficient number of car parks and garages. There are very few of either. The matter cannot be wholly dealt with by car parks and garages until there is a certain quantity of them. What is my right hon. Friend's policy and that of his Department about the supply of car parks and garages? Does he give advice to anyone? Are stipulations laid down? Is my right hon. Friend concerned with the town-planning provisions carried out by the local authority? What is being done about cars?
I understand that the major responsibility is that of the local council, but quite clearly it cannot deal with these matters because it has no knowledge of the overall Government policy. We are not dealing with local conditions. If we were, I would by all means let the local authority take charge. When we have to cater for cars which are being forced upon us by the policy of the Ministry it is the responsibility of the Ministry of Transport to say what should be done. I hope that my hon. Friend will say something on that subject.
Is anything being done or intended to be done by way of Regulation? In these streets, where cars, lorries, and so on, are such a nuisance, there are not, so far as I know, any special Regulations. As a rule there is an endless line of cars parked, generally on both sides of the road, and no attempt is made to control them otherwise than under the general provisions of the Order. I have asked the Town Clerk of Hendon, and he has told me that his council has no power, so far as he knows, to make Regulations. I do not believe that the county council has such power. Those that exist rest with the Minister of Transport.
Although we cannot cure this nuisance, we could make some alleviation. We might have unilateral parking on alternative days so as to secure reasonable passage through the narrower of the streets. I do not know how much consideration has been given to this matter. I hope that my hon. Friend will be able to tell us what is intended. The main difficulty arises because of the multiplicity of authorities. I have troubled the House by reading passages from certain letters, from which it was apparent that whenever we try to get something done the responsibility is passed elsewhere, to the Minister of Transport, to the police, to the county council, to the borough council. There are private individuals and others; for all I know there are other people who may be responsible in other connections. Here is an almost prize example of "buck-passing". Wherever one goes, the buck is passed; one can never pin anyone down and say that it is his job to have something done.
I want to pin down the Minister of Transport tonight. That is why I have come here. I ask my hon. Friend to say that he will make himself responsible and


have something done for what is not yet a serious problem but one which, if it is not tackled, will become just as serious in outer London as it is now in the centre of the City.

10.31 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): I congratulate my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth) on the effective manner in which he has attempted to pin me down as responsible for this distracting problem which is troubling his constituents. I congratulate him on securing the opportunity of raising the matter on the Adjournment tonight, and I will tell him at once that I do sympathise with the residents of Hendon and, indeed, elsewhere, who are troubled by this particular problem. Inevitably, it is a problem which is growing, growing because there are more motor cars on the roads, and growing for a variety of other reasons to which my hon. Friend referred.
I am not sure that I entirely agree with his thought that in Central London there is a free-for-all in which offenders suffer as well as offend. I think that in Central London there is much of this problem too; there are many residential areas in the centre of London where cars are parked continuously. It is a very general problem.
Government policy to deal with this matter basically depends on the Road Traffic Act, 1956, which this House approved last year. That Act gave local authorities, first in the Metropolitan Police District and the City of London, the power to make charges for cars parked on the highway, either with or without metering schemes. Those schemes are, of course, subject to the Minister's approval, and one or two have already been proposed. The whole objective of that piece of legislation was to achieve exactly what my hon. Friend wishes to do, namely discourage long-term parking on the highway.
Primarily, of course, our objective at the present time is to achieve a proper balance on the highway between the parked vehicle and the moving traffic, to remove the congestion which troubles us all. At present, it is quite obvious, in any part of London or any other city, that the balance is excessively in favour of the

parked car, which occupies far more than its share of the highway, to the detriment of the traffic flow.
It is true, as my hon. Friend implied, that the complement to that immediate objective will be the building of off-street parking accommodation. Government policy with regard to that is that Government funds should not be spent on it, that it is not a job for the Government to undertake and that garages, for this purpose or any other, should be run either by private enterprise or by local authorities, which have power to do it. That is the answer to one of the points which my hon. Friend put, that local authorities do have the power to do this where they think it appropriate, or, alternatively, private enterprise may construct car parks.
At the moment, what off-street car parking accommodation in garages there is, in the Central London area anyhow, is not completely used, because, not unnaturally, if people can leave their motor cars in the street for nothing they tend to do so. It will only be as the regulations become stricter for street parking that the demand for off-street parking will increase. Already, there are signs that that may happen. There are two or three schemes now going forward for large off-street parking accommodation in Central London, and others are being contemplated.
I readily acknowledge that it will be some time before this general development spreads to outer London. Indeed, as my hon. Friend has rightly said, as this policy succeeds in Central London, at any rate for the time being, the likelihood is that the problems to which my hon. Friend has referred will be temporarily worse outside, partly due to the ever-increasing number of cars, partly due to the restrictions on waiting on the main roads, and partly due to the increasing number of commutors who drive to the outskirts of London, leave their cars there for the day, on the streets as a rule, and then embark on the Underground and proceed to Central London. That is something that we very much want them to do, from the point of view of relieving congestion in Central London, but certainly it worsens the problem outside in Hendon and similar places.
With regard to waiting regulations, it would in theory be possible for a local authority to propose a "no waiting" regulation or a parking scheme in any of these streets, but in practice these proposals


are normally approved only on the ground of traffic flow or road safety and not on amenity grounds. Obviously the considerations that we are talking of here are the amenities of the householders concerned, their convenience and access to their houses. Therefore, at the present time it is true that in practice there would be little prospect of such proposals being made.
There are a large number of causes of the present conditions. Town planners in the past have not provided enough garages for cinemas, offices and all the other places to which motor cars are driven, and there is a long history of the reasons why we have these conditions today. My hon. Friend asked what is happening.
For instance the London County Council requires stringent regulations for the provisions of off-street parking garages for new buildings, and I believe they may go even further, but it will be a long time before that cures the problem.
The British Transport Commission, at our request, have done quite a bit on many of these suburban stations to provide car parks. The accommodation that they have provided has been doubled in the last two years—with about 2,000 spaces at the present time and plans to increase it to about 2,500.

Sir H. Lucas-Tooth: My hon. Friend has spoken of the L.C.C. Of course, he will appreciate that Hendon is in Middlesex, and although the Middlesex County Council may be alive to its own problems, it may not be so aware of what is in the Minister's mind with regard to Inner London. Will he see that that is made known to the outer areas? There is not necessarily a link-up between the two. That is where the difficulty arises.

Mr. Nugent: I will, but I feel pretty certain that the Middlesex County Council, as the planning authority responsible, is very well aware of this matter. I will, however, certainly assure myself that it is.
I see that at Mill Hill station the Hendon constituency is fairly well provided with a car park, but we are pressing the Transport Commission to go further and I will make a special inquiry with the Commission to see whether more

can be done to help near the Underground stations in and around Hendon.
In the Ministry we have been aware of this problem intensifying, not only in Hendon and not only in the outer regions of London, but throughout London for some time. Residents in quiet streets, who have been accustomed to seeing hardly any motor cars, suddenly see motor cars arriving and standing in the streets all day. Naturally, those residents complain. They feel that their peace and amenity have gone. There is, in fact, very little that one can do about it in the short term.
On the instigation of the London County Council, we have asked the London and Home counties Traffic Advisory Committee to consider this problem in relation to commercial vehicles, which stop in certain areas and cause a commotion because of their size, noise, and so on. As a result of my hon. Friend's representations, I will ask the Advisory Committee to extend the review that it is now making to cover all vehicles, including private cars, in the street parking problem on the periphery of London, which, I quite accept, is a problem which will tend to worsen in the coming years.
I think I have said enough to show that there is no simple answer. The solution will only come about by the combination of a number of factors—for example, by town planning regulations which have better regard to the needs of the present day and by the building of off-street car parks of one kind and another which will gradually follow increased traffic regulations, and so on—but only gradually can an improvement come about.
I assure my hon. Friend that we are aware of the problem. I sincerely sympathise with his constituents who are troubled in this way, and we are much concerned to do anything we can to alleviate the position. We will certainly ask for the survey and for advice about how we can best ameliorate it. If any further ideas come to our minds about how the position might be improved, we will certainly follow them. I thank my hon. Friend for raising the matter, and I assure him that it has our serious attention.

Question put and agreed to.

Adjourned accordingly al nineteen minutes to Eleven o'clock.